THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


National  Watchman  Economic  Series. 

VOL.  1.  AUGUST  1,  1892.  NO.  2. 


PHILOSOPHY  OF  PRICE 

AND  ITS 

RELATION  TO  DOMESTIC  CURRENCY 


By  N.  a  dunning 

AUTHOR    OF    HISTORY   OF    ALLIANCE,    HISTORY   OF   UNITED    STATES 
DOLLAR  AND  EDITOR  NATIONAL  WATCHMAN. 

Sipgle  Gopy    -     .     .    25  Gepts. 

published  by 

National  Watchman  Publishing  Company, 

washington,  d.  c,  1 892. 


'rn[  B 


PHILOSOPHY  OF  PRICE, 


AND   ITS 


RELATION  TO  DOMESTIC  CURRENXY, 


SECOND  EDITION. 


By  N.  a.  dunning. 


•'  111  fares  the  land  to  hastening  ills  a  prey, 
Where  wealth  accumulates  and  men  decav." — Goldsmith. 


^      WASHINGTON,  D.  C: 
The  isiATiONAL  Economist  Publishing  Co. 


11590. 


COPYRIGaTED. 

1887. 


CONTENTS. 


Preface ,...,,., 

CHAPTER  I. 

Price — "Wliat  it  Is,  and  how  established ;  The  theory  of 
price;  Value  in  nse  and  value  in  exchaiige;  Commercial 
value ;  Supply  and  demand ;  Overproduction ;  Ability  to 
purchase ;  Conditions  compared ;  Labor  the  sole  producer  of 
wealth ;  Visible  and  invisible  capital ;  Products  purchases 
money ;  How  wages  are  reduced ;  Products  of  labor  the 
ruling  factor ;  Relations  in  exchange  of  money. 

CHAPTER  11. 

Price  and  its  Dependence  upon  Currency — The  discov- 
ery of  money ;  More  money  higher  prices,  less  money 
lower  prices ;  Money  during  the  Dark  Ages :  Contrast 
between  an  abundance  and  want  of  currency;  Effects  of  a 
decreasmg  currency ;  Worst  effect  upon  labor ;  Conflict 
between  labor  and  capital ;  The  quantity  of  currency  gov- 
erns  price ;    Unjust    money    system ;    Loss    to   the  countrv 

7451.04 


n  CONTENTS. 

through    enforced    idleness;    Quotations    from    neai'lj    100 
authors  and  statesmen. 


CHAPTER  III. 

Price  and  Its  Relation  to  Business — Story  of  contraction  ^ 
How  bonds  were  sold  ;  Public  Strengthening  Creait  Act ; 
Intent  of  the  law  ;  Silver  demonetized ;  Grant's  letter ;  Re- 
sumption ;  How  bonds  can  be  paid ;  Decision  of  Supreme 
Court  on  the  Legal  Tender  Act;  Table  of  currency  per 
capita ;  Table  of  failures  each  year ;  Table  of  payment  of 
national  debt ;  Henry  Clay  on  currency ;  Comparison  of 
prices ;  Overproduction  explained. 

CHAPTER  lY. 

Kind  and  Amount  of  Currency — What  we  want ;  A 
distinctive  currency ;  Gold  demonetized ;  Silver  demone- 
tized ;  Money  in  the  Old  World  ;  Money  a  measure  of  value.; 
Bryant  on  the  power  of  money ;  Kind  of  currency  needed ; 
How  money  is  redeemed  ;  Thomas  Jefferson  on  paper  money ; 
Currency  bottomed  on  taxation;  Extracts  from  report  of 
Silver  Commission  ;  Objections  to  metallic  currency  ;  Gold 
and  silver  a  commodity ;  Amount  of  work  performed  by  a 
dollar. 

CHAPTER  Y. 

Yalue  and  its  Relation  to  Currency — Aristotle  on  value 
of  money  ;  "What  is  value  in  money  ;  Argument  of  the  yard- 
stick ;  How  government  should  provide  money ;  Ancient 
idea  of  money ;  90  per  cent  of  business  done  with  money 
having  no  value ;  One  commodity  cannot  measure  the 
value  of  another ;  Fluctuations  of  gold  and  silver ;  Table 
of  fluctuations ;  quantity  establishes  value  ;  Difference 
between  a  treasury  and  a  bank  ;  Mistakes  of  government. 

CHAPTER  YI. 
Protection  to  Home  Industry  and  Contraction  oi  Curren- 


CONTENTS.  Ill 

cy ;  Synopsis  of  the  argument  of  protection  ;  Benefits  of  protec- 
tion ;  Its  aim  and  object ;  Conditions  surrounding  it ;  Emigration 
and  currency  in  connection  with  protection  ;  Protection  to 
all  or  none  ;  The  act  granting  foreign  pauper  labor  con- 
tracts of  1864;  Money  appropriated  to  carry  it  into  effect; 
Contraction  and  protection,  one  or  the  other  must  cease. 


CHAPTEE  VII. 

CONCLUSIONS. 

War  between  capital  and  labor ;  The  only  remedy ; 
Peason  for  depression  in  business;  How  to  examine ' these 
questions ;  Hon.  L.  H,  Weller's  formula ;  Why  cheap  prod- 
ucts make  hard  times ;  Hard  times  produce  crime  as  well  as 
poverty  ;  Kind  and  amount  of  currency ;  Proportion  of  rich 
to  poor ;  What  the  export  of  silver  has  done  ;  Wheat  from 
India  and  Dakota ;  Standard  of  value ;  Standard  of  payment; 
Knights  of  Labor ;  Answers  to  questions. 

APPENDIX. 

LECTURE  DELITEEED  BEFORE  THE  INGHAM  COUNTY    FARMERS'    IN- 
STITUTE AT  MASON,  MICH.,  FEBRUARY  11,  1887. 

Labor — Reasons  for  its  present  condition,  and  remedy 
pointed  out ;  The  laws  governing  land  and  currency  responsi- 
ble ;  An  expose  of  our  land  system  ;  Our  currency  system  and 
its  relation  to  labor  ;   Are  we  going  back  to  barbai'isra  ? 


PEEFACE. 


-o-- 


In  attempting  to  place  this  volume  before  the  public,  an 
apology  would  perhaps  be  in  order.  While  this  may  be  true  I 
am  led  to  beheve  my  excuse  will  sufficiently  justify  the  act. 
At  an  early  age  I  began  the  business  of  merchandising, 
which  I  have  recently  given  up.  From  1862  to  1885  I  was 
continually  engaged  in  selhng  dry  goods,  groceries,  etc.,  over 
the  counter  to  my  fellow  townspeople  and  farmers  from  the 
adjoining  country.  Upon  going  out  of  business  I  was  surprised 
to  find  myself,  though  comparatively  young,  the  oldest  business 
man  in  our  city — my  business  sign  being  the  oldest  in  town.  I 
have  since  had  leisure  to  examine  into  the  changes  of  the  past 
twenty-three  years,  and  am  astonished  at  the  result.  But  eight 
men,  out  of  more  than  one  hundred  and  eighty  who  had  tried  to 
accumulate  property  by  going  into  mercantile  and  mechanical 
business,  had  made  a  success.  And  not  a  single  manufacturing 
estabhshment  had  weathered  the  storm.     In  fact,  the  business 


VI  PREFACE. 

ventures  in  our  town  of  2,000  inhabitants  resulted  about  as 
follows:  Every  person  who  had  engaged  in  the  business  of 
loaning  money,  no  matter  how  small  his  beginnings,  had  made 
a  success,  while  about  ninety-five  per  cent,  of  all  other  business 
ventures  had  proved  a  failure.  Beginning  with  this  revelation 
I  have  carefully  and  diligently  sought  for  the  cause,  and  to  my 
own  satisfaction  at  least,  I  have  succeeded  in  finding  it.  My 
experience  is  simply  that  of  all  others  engaged  in  similar  voca- 
tions. I  used  to  buy  laro^e  bills  of  sroods,  bring  them  home, 
sell  them  to  my  customers  and  liave  a  margin  of  profit.  I 
would  give  credit  to  those  asking  it,  to  a  more  or  less  extent. 
The  loss  from  this  source  was  l)ut  trifling.  After  a  time,  buj'" 
goods  as  cheap  as  I  could,  the  decline  in  price  during  the  year 
consumed  my  profits.  Besides  this,  men  whom  I  had  for 
years  trusted  with  goods,  and  had  paid  ])romptly,  either  asked 
for  more  time  or  failed  to  pay  altogether.  This  continued 
until  self-protection  compelled  me  to  curtail  my  business — buy 
much  less  goods  and  give  but  little  credit.  A  general  distrust 
took  the  place  of  confidence,  so  much  so,  that  everyone  asking 
credit  was  an  object  of  suspicion.  A  sort  of  forced  economy 
seemed  to  take  possession  of  the  people,  which  upon  close  in- 
spection proved  only  an  inal)ility  to  purchase  what  they 
actually  needed.  A  struggle  for  cheap  goods,  to  sell  cheap  in 
order  to  meet  the  wants  of  the  peoj)le,  who  for  some  unknown 
cause  were  not  prospering  in  their  business,  took  the  place  of 
regular  trade,  and  with  it  legitimate  merchandising  ceased. 
Now,  bankrupt  stocks,  auction  stores  and  brokers'  offices  reign 


PREFACE.  VH 

supreme  in  all  branches  of  ti-ade.  Dnring  all  these  years,  when 
values  of  all  other  forms  of  wealth  have  shrunk  to  such  sin 
alarming  extent,  money  has  continued  steadily  to  increase  in 
value,  and  now  holds  high  carnival  over  all  others.  That  this 
one  branch  out  of  all  our  vast  and  varied  enterprises  should 
thrive  and  all  others  wither  and  go  down,  is  in  my  judgment  a 
subject  of  profound  importance.  It  calls  for  the  most  careful 
examination  and  the  highest  order  of  statesmanship.  Labor, 
which  is  the  architect  of  wealth  in  all  its  forms,  calls  loudly 
for  justice  and  fair  play.  The  innumerable  business  ventures 
of  our  people  demand  recognition  of  their  right  to  survive.  In 
fact,  the  continued  preservation  of  our  civilization,  our  high 
standard  of  morals,  and  our  social  and  political  equality,  ail 
conspire  to  direct  attention  to  this  ever  increasing  sepai'ation 
of  values. 

This  volume,  which  I  venture  to  place  before  the  public, 
contains  my  ideas  of  the  cause  and  its  remedy.  However  much 
they  may  be  at  variance  with  others,  I  have  endeavored  to  have 
them  represent  independence  of  thought  and  honesty  of  purpose. 

I  have  received  many  suggestions  of  value,  and  many  kind 
expressions  predicting  success,  for  which  I  am  truly  grateful. 

To  my  esteemed  friend,  Milton  Ryan  Esq.,  I  desire  to 
acknowledge  a  debt  of  gratitude  not  easily  repaid.  He  has, 
with  characteristic  unselfishness,  aided  me  in  every  manner 
possible  in  the  prosecution  of  this  work.  He  has  given  me 
many  valuable  ideas  and  assisted  in  the  development  and  com- 
pletion of  many  intricate  arguments  and  propositions,  which 


Vlll  PKKFAOE. 

in  a  work  of  tliis  kind  must  of  necessity  be  tlioronglily  inves- 
tigated. 

A  careful  perusal  of  this  volume  will  enable  the  reader,  if 
not  convinced  of  the  correctness  of  the  propositions  put  forth, 
to  at  least  become  conversant  with  the  arguments  in  their  favor. 

N.   A.  D. 


THE  PHILOSOPHY  OF  PRICE 

AND 

ITS  RELATION  TO  DOMESTIC  CURRENCY. 


CHAPTEK  I. 

PKICE — WHAT  IT  IS,  AND  HOW   ESTABLISHED. 

In  all  ages  past,  the  conditions  of  mankind,  morally,  so- 
cially and  intellectually  have  been  subject  to  changes,  some- 
times for  better,  but  often  for  worse.  Why  these  varied 
conditions  exist,  has  led  to  much  thought  and  consideration. 
Men,  who  have  built  for  themselves  enduring  monuments,  are 
those  who  have  sought  and  been  successful  in  discovering  and 
pointing  out  ways  and  means  by  which  the  human  family 
could  make  advancement  toward  the  consummation  of  life's  chief 
end — peace,  happiness  and  prosperity.  While  attempting  tliis, 
many  theories  have  been  put  forward;  some  good,  others  bad, 
many  impracticable,  occasionally  one  sound  enough  to  stand  the 
test  of  centuries.  Experience  has  performed  an  important 
part  in  this  connection,  and,  while  it  has  not,  in  all  cases, 
selected  that  which  was  best,  it  has  retained  but  a  small  portion 
of  that  which  was  bad.  But,  as  civilization  progresses,  new 
questions  are  continually  presenting  themselves  for  solution. 
Sometimes  they  ai'e  old  ideas  coming  up  under  different  cir- 


10  PHILOSOPHY    OF    PRICE. 

ciuiistances  in  new  forms,  and  again  the  same  proposition  may 
remain  unsolved  for  many  years,  yet,  periodically  claiming  tlie 
attention  of  statesmen  and  scholars.  • 

Most  men  have  theories  for  all  the  actions  of  life,  and 
those  who  know  the  least  concerning  the  real  truth  are  apt  to 
advance  a  theory  the  most  promptly.  For  this  reason,  nothing 
but  a  careful  study  of  the  suhject  will  enal)le  any  person  to 
evjitiapiwoximate  conclusions  toward  the  right. 

Thid  ifkeory  of  price,  what  it  is,  how  made,  and  the  factors 
go^'crniiig  it,  is  no  exception  to  this  general  rule.  The  more 
thought  I  have  given  this  subject  the  more  profoundly  I  am 
impressed  with  its  importance.  ISTotwithstandiiig  this  question 
has  l)een  under  discussion  for  hundreds  of  years,  it  has  assumed 
gigantic  proportions  in  our  own  nation  within  a  recent  period. 
Without  further  remarks  I  will  begin  its  consideration. 

Adam  Smith,  the  father  of  political  economy,  attempts  to 
prove,  in  his  great  work,  "The  Cause  of  the  Wealth  of  x^a- 
tion^"  the  idea  of  a  double  value,  or,  as  he  expresses  it,  "a  val- 
ue in  use  and  a  value  in  exchange."  This  proposition  has  been 
assailed  by  some  of  the  ablest  writers  since  that  time,  such  as 
]\fil!,  Senior  iand  others.  It  has  Ukewise  been  defended  by 
some  of  the  greatest  minds  the  world  has  ever  known.  It  is 
.  therefore  now,  as  it  has  been  in  the  past,  a  debatable  question 
and  calls  for  careful,  candid  consideration  before  opinions  with 
any  degree  of  honesty  or  intelhgence  can  be  given. 

Value  is,  without  doubt,  an  essential  element  used  in  ex- 
change, but  I  do  not  believe  that  exchange  is  an  essential  ele- 
ment in  value.  In  my  judgment  there  is  a  manifest  difference 
between  value  in  use  and  in  exchange  which  should  be  fully 
examined.  Value  in  use  is  the  holder's  value;  value  in  ex- 
change is  the  seller's  value.  A  person  may  hold  a  thing,  not 
in  order  to  sell  or  exchange  it,  but  in  order  to  use  it.  Many 
things  may  possess  value  that  are  not  exchangeable  at  all.  If 
we  limit  value  to  thinc-s  that  are  whollv  exchanojeable  we  shall ' 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  11 

exclude  a  large  and  verj  important  class  of  commodities.  A 
man  may  own  an  article  which  has  no  exchangeable  value  and 
at  the  same  time  place  a  very  high  value  upon  it  himself,  be- 
cause he  understands  its  use  and  can  turn  it  to  a  profital>le 
account.  Msmj  instances  showing  the  truth  of  this  proposition 
might  be  given.  Prof.  Sjme  says :  "Yalue  in  use  is  the  basis  of 
all  industrial  activity.  "Without  it  there  would  be  no  jjroduc- 
tion,>and  without  production  there  could  be  no  exchange.  To 
limit  value  to  exchange  then,  is  to  deprive  economic  science 
of  the  very  foundation  on  which  the  whole  superstnicture 
rests."  Mill  and  others  say :  "There  are  two  elements  to  value 
— utihty,  and  scarcity  or  difficulty  of  attainment."  This  can 
not  be  true,  as  these  two  elements  cannot  of  themselves  consti- 
tute value.  There  are  many  things,  such  as  water,  that  may  be 
useful,  but  at  the  same  time  have  no  value.  Also  an  article 
may  be  exceedingly  scarce  and  yet  be  valueless,  neither  diffi- 
culty of  possession  nor  attainment,  though  combined  with  utility, 
will  confer  value.  Water,  however  useful,  and  ever  so 
scarce,  as  in  the  case  of  a  traveler  in  a  desert,  does  not  have  any 
value  conferred  ujjon  it  on  that  account,  if  the  traveler  does  not 
want  it.  But  if  he  wanted  it. — if  he  was  suffering  for  it — and 
if  he  believed  it  would  satisfy  his  thirst,  water  would  then  be 
immediately  invested  with  a  value  in  his  estimation  which 
neither  its  acknowledged  utility  nor  its  inaccessibility  or  scarcity 
previously  conferred. 

Value  in  use  is  an  absolute  term.  Yalue  in  exchange, 
commercial  value,  or  price^  is  a  relative  term.  The  intrinsic 
value  of  a  thing  is  what  it  is  worth  to  me,  if  I  keep  it. 

The  price,  or  commercial  value  of  a  thing,  on  the  other 
hand,  is  what  some  one  else  will  give  me  for  it.  The  price  of  a 
thing  is  what  it  will  bring  in  the  market;  and  while  there  is 
only  one  price,  there  are  always  several  values.  A  price  can 
only  be  arrived  at  when  two  or  more  values  coincide,  or  when 
the  estimate  put  upon  an  article  ])j  a  seller  agrees  with  the 


12  PHILOSOPHY  OF  PRICE. 

estimate  put  upon  it  by  a  buyer.  Not  only  do  individuals  differ 
in  their  ideas  of  commercial  value  (as  I  shall  call  it),  but  they 
have  different  methods  of  arriving  at  them.  The  commercial 
value  of  an  article  is  always  ascertained  by  a  comparison  of  in- 
dividual values.  Each  party  to  an  exchange  demands  a  certain 
amount.  If  the  demands  are  equal,  the  price  will  be  made  and 
the  exchange  will  be  effected.  If  the  demands  are  unequal,  no 
price  will  be  established  and  consequently  no  exchange  vnll  take 
place,  unless  the  demands  of  the  one  rise  or  fall  to  the  demands 
of  the  other.  The  price  of  any  article,  therefore,  is  simply  its 
commercial  value.  Almost  everything,  at  the  present  time, 
and,  as  the  arts  and  sciences  are  advanced,  everything,  no 
doubt,  will  have  two  values — commercial  value  or  price,  in- 
trinsic value  or  vorth.  The  first  always  fluctuates,  the  latter 
never.  The  first  depends  entirely  upon  the  conditions  sur- 
rounding it;  the  latter  remains  the  same  under  all  circumstan- 
ces. The  iron  girders  which  span  the  stream  are  not  changed 
in  their  intrinsic  value  by  their  use,  no  matter  if  their  com- 
mercial value  varies  from  five  to  fifty  cents  per  pound.  This 
being  true,  price,  then,  is  the  result  of  commerce,  trade  or  bus- 
iness. It  is  purely  a  commercial  phrase,  and  obtains  recognition 
in  the  language  of  the  world  by  its  connection  with  traffic  or 
exchange.  We  inquire  the  "irice  of  wheat  to-day,  and  are  in- 
formed it  is  worth  one  dollar  per  bushel.  This  is  the  commer- 
cial value  placed  upon  that  product  from  the  present  under- 
standing of  the  situation  it  occupies.  To-morrow  it  may  be 
higher  or  lower,  according  to  a  better  knowledge  of  all  the  facts 
relating  to  it;  but  during  this  fluctuation  it  requires  only  the 
same  quantity  to  reheve  hunger  or  sustain  animal  life. 

That  price  is  commercial  value,  and  that  commercial  values 
are  always  changing,  I  conclude  are  facts  beyond  question.  But 
when  we  enter  upon  an  investigation  of  the  causes  for  this  dif- 
ference in  price,  why  it  is  less  or  more  at  some  times  than  at 
others,  we  pass  into  a  field  almost  limitless  in  extent,  which 


WHAT  IT  IS  AND  HOW  ESTABLISHED,  13 

45I10WS  signs  of  constant  travel  by  the  most  profound  tliinkers 
of  all  ages  past.  For  this  reason  we  are  met  at  the  commence- 
ment with  innumerable  theories  and  speculations.  Some 
writers  have  treated  the  subject  as  a  matter  of  but  trifling  im- 
portance, while  others  have  written  volumes  upon  it.  Political 
economists  have  sought  to  make  it  plain,  but,  in  my  judgment, 
have  utterly  failed.  There  seems  to  be  no  advancement  beyond 
the  old  ideas  of  one  hundred  years  ago. 

While  the  world  is  making  rapid  strides  in  all  other  arts 
and  sciences,  why  should  it  not  in  that  art  or  science — no 
matter  which  it  is  called — that  treats  of  the  desired  end  of  all 
labor,  the  accumulation  and  enjoyment  of  wealth  ? 

When  people  come  to  understand  that  pohtical  economy 
treats  of  the  most  common  and  ordinary  affairs  of  hfe — the 
business  relations  of  men  to  each  other — that  these  relations  are 
\'iewed  from  different  standpoints,  they  will  learn  to  look  upon 
that  science  with  less  awe,  and  beheve  writers  upon  that  subject 
less  infallible. 

In  the  early  ages  of  our  race  there  were  no  commercial 
relations,  no  exchanges,  and  consequently  no  commercial  value 
or  price.  The  intrinsic  value  of  food  and  raiment  was  alone 
considered.  Soon,  however,  trade,  barter  or  exchange  came 
into  use  among  the  different  famihes  and  tribes.  The  products 
of  one  tribe  were  exchanged  for  those  of  another.  Then  the 
idea  of  a  price,  or  commercial  value,  began  to  obtain  and  has 
continued  to  the  present  time. 

To  ascertain  what  makes  that  price,  what  constitutes  the 
commercial  value  of  the  products  of  labor,  is  the  subject  of  this 
chapter. 

Many  writers  have  settled  down  to  the  theory  that  supply 
and  demand  wholly  establish  the  price ;  that  with  a  surplus  of 
products  prices  always  decline,  and  with  a  scarcity  always  ad- 
vance. This  theory  has  come  to  be  almost  the  only  recognized 
explanation  of  this  question.      It  has  been  adopted  by  many 


14  PHILOSOPHY  OF  PKICE. 

able  writers,  and  quoted  as  true  by  both  statesmen  and  scholars. 
This  is  a  dangerous  doctrine,  and  from  it  emanates  many  de- 
structive theories.  This  dogma  of  supply  and  demand  can, 
with  propriety,  be  placed  beside  Ricardo's  theory  of  rent  or  the 
Malthusian  theory  of  the  population  of  the  earth.  Each  has 
some  foundation  in  fact,  but  when  arguments  are  brought  to 
bear  upon  them,  the  superstructure  is  quickly  ascertained  to  be 
much  larger  than  the  foundation,  and  other  theories  must  be 
manufactured  and  put  forward  to  make  up  the  necessary  sup- 
ports. The  theory  of  supply  and  demand  will  not  admit  of 
want  and  hunger  amidst  plenty  and  low  prices.  It  cannot  ex- 
plain the  stubborn  fact  of  pauperism  and  distress  during  an  era 
of  great  abundance  and  cheap  commercial  values.  The  signs 
of  the  times  and  the  hard  experiences  of  daily  life  are  a  direct 
refutation  of  its  soundness. 

It  is  claimed  that  overproduction  is  the  prime  cause  of  all 
this  difficulty,  or  in  other  words,  that  the  people  are  suffering 
from  the  effects  of  a  surplus  of  success,  or  from  the  evils  of  a 
reckless  and  persistent  industr)^  For,  if  the  term  "overpro- 
duction" means  anything,  it  is  that  our  business  enterprises 
have  been  too  successful;  that  the  economic  laws  governing  our 
people  are  too  perfect  and  our  inventive  genius  too  prolific  of 
good  results;  that  the  nation  has  been  so  prosperous  and  so 
fortunate  in  its  undertakings  that  the  present  hard  times  have 
been  brought  upon  us  in  consequence.  Here  is  an  argument 
where  too  great  a  victory  brings  defeat,  too  much  happiness 
brings  distress  and  misery.  Let  us  examine  the  subject  in  that 
light.  Does  an  overproduction  of  wheat  and  beef  cause  my 
neighbor  to  go  hungry  ?  Is  an  abundant  supply  of  clothing  the 
cause  of  his  being  ragged ;  or  of  boots  and  shoes  the  cause  of 
his  going  barefoot?  Is  yonder  supply  *of  wood  and  coal  a 
reason  for  his  being  half  frozen  with  wintry  winds  ?  Certainly 
not.  In  all  these  cases  the  supply  is  abundant,  and  the  demand 
most  urgent,  yet  the  supply  is  not  lessened  nor  the  demand  sat- 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  15 

i'sfied.  "Why  ?  Because  there  is  a  want  of  ability  to  purchase. 
It  is  plain  that  there  can  be  no  real  overj^roduction  unless  a 
large  surplus  remains  after  all  the  people  have  been  fully  sup- 
plied with  the  necessaries  and  comforts  of  hfe.  The  pubhc 
cannot  overtrade  by  distributing  each  year's  productions  among 
those  who  really  need  them  to  use.  Too  high  prices  cannot  be 
paid  for  labor,  unless  the  laborers  in  general  actually  gain  more 
than  their  equitable  share  of  the  year's  productions.  Neither 
can  there  be  an  overstock  of  laborers  so  long  as  thousands  are 
suffering  for  want  of  the  very  articles  these  laborers  would 
gladly  produce,  if  they  could  be  employed.  There  cannot  be 
too  many  houses,  when  they  would  be  filled  with  tenants  able 
to  pay  the  rent  if  work  could  be  obtained.  We  must  look, 
therefore,  for  the  real  cause  of  these  calamities,  not  in  overpro- 
duction, but  in  the  power  that  governs  the  distribution  of  the 
products.  It  does  not  matter  how  urgent  the  demand  or 
abundant  the  supply,  there  must  be  some  ability  to  purchase, 
or  the  demand  is  not  satisfied.  How,  then,  can  it  be  truthfully 
said  that  supply  and  demand  are  the  sole  arbiters  of  price  ? 

John  Stuart  Mill  discusses  the  question  at  greater  length, 
but  with  the  same  conclusion.     He  says : 

"The  argument  against  the  possibility  of  general  oveqiro- 
duction  is  quite  conclusive,  so  far  as  it  applies  to  the  doctrine 
that  a  country  may  accumulate  capital  too  fast;  that  produce  in 
general  may  be  increasing  faster  than  the  demand  for  it, 
reducing  all  persons  to  distress.  This  proposition,  strange  to 
say,  was  almost  a  received  doctrine  so  late  as  thirty  years  ago.'' 

There  can  be  no  price  without  a  purchaser ;  no  purchaser 

without  the  necessary  abihty  to  purchase.     Therefore  it  must 

follow  that  the  ability  to  purchase,  in  all  cases,  absolutely  estaj> 

lishes  the  commercial  value  or  price.     There  may  be  isolated 

instances  of  an  unexpected  demand,  or  an  unlooked  for  scarcity, 

which  will  initiate  a  competition  among  buyers,  yet  the  wealth 

of  the  purchasers  detennines  the  limit  beyond  which  prices 

cannot  be  driven.     On   the  other  hand,  an  abundant  supply 


16  PHILOSOPHY  OF   PRICE. 

may  tend  to  lower  the  price  of  a  commodity ;  but  the  -wealth  of 
the  people,  the  ability  to  hold  and  not  sell,  or  to  buy  and  hold, 
determines  completely  and  finally  how  low  the  price  shall  go — 
acting  at  all  times  as  a  check  and  safeguard.  Let  me  illustrate 
this  point — that  supply  and  demand  do  not  make  the  price. 
Mr.  A  has  a  good  dinner  to  sell.  Mr.  B  is  hungry.  Mr.  A 
has  the  supply,  and  Mr.  B  has  the  demand.  In  this  case  what 
establishes  the  price  of  the  dinner;  its  original  cost  to  Mr.  A, 
or  Mr.  B's  hungry  stomach  ?  Neither.  The  commercial  value 
is  finally  and  fully  fixed  by  the  contents  of  Mr.  B's  pocket- 
book.  It  should  always  be  remembered  that  price  knows  no 
original  cost,  No  matter  how  much  a  bushel  of  wheat  costs  in 
production,  its  commercial  value  is  made  without  any  regard  to 
it.  The  idea  that  cost  of  production  enters  into  price  is  all 
wrong.  Price  is  what  it  will  sell  for  and  nothing  else.  A 
man  may  consume  a  lifetime  in  making  a  machine,  or  some- 
thing else,  perhaps  of  value  to  mankind,  and  when  completed 
cannot  dispose  of  it  for  a  single  dollar.  Mr.  A  may  want  fifty 
cents  for  his  dinner — it  may  have  cost  that  much  or  more — but 
if  Mr.  B  has  but  twenty-five  cents,  the  dinner  must  be  sold  for 
that  or  remain  unsold,  and  consequently  without  price,  because 
a  thing  that  cannot  be  exchanged  has  no  commercial  value  or 
price.  If  supply  and  demand  were  the  only  factors  in  price, 
legislation  might,  to  a  large  extent,  regulate  not  only  the  price 
of  the  products  of  labor,  but  of  labor  itself.  It  could  say  to 
the  farmer:  You  shall  raise  but  a  certain  amount  of  grain; 
and  to  the  laborer :  You  shall  do  but  so  many  days'  work.  No 
greater  calamity  could  befall  a  civilized  nation.  It  would  put 
an  end  to  all  progress  or  advancement,  and  destroy  all  intelli- 
gence and  just  emulation.  But  fortunately  this  is  not  the  case, 
as  the  laws  governing  this  question  are  of  a  social  nature,  and 
seem  to  rest  on  the  prosperity  and  happiness  of  the  whole  peo- 
ple, and  point  with  the  finger  of  prophecy  to  one  universal 
republic  governed  and  controlled  by  wise  and  generous  regula- 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  17 

tions,  which  aim  at  making  the  people  equal  in  all  respects 
before  just  laws. 

No  nation  is,  or  can  be,  happy  or  prosperous  wath  low 
prices.  They  operate  as  a  gradually  increasing  weight  in  the 
great  race  of  life ;  and  those  who  are  the  most  in  want  usually 
carry  the  heaviest  burdens. 

The  condition  of  every  nation  is  gauged,  as  regards 
advancement  and  social  privileges,  not  by  the  cheapness  of  its 
products,  but  by  their  higher  commercial  values.  The  people 
who  place  the  liighest  value  on  their  labor  and  its  products  are 
the  most  enhghtened,  prosperous,  and  consequently  the  happiest. 
'±o  prove  this,  I  refer  to  the  cheap  wheat  of  Russia  and  India; 
the  cheap  rice  of  China  and  Japan ;  the  cheap  cotton  of  India 
and  Eg}^t,  and  the  cheaper  wools  of  the  South  American 
states.  Compare  the  countries  named  with  our  own,  or  with 
France,  England  and  Germany.  These  comparisons  will  prove 
my  assertions  true.  This  proposition  is  a  strong  argument 
against  unrestricted  commerce,  as  the  poorest  and  most  degraded 
nations  can  and  do  sell  their  products  the  cheapest,  thereby 
compelling  other  nations,  in  their  industrial  pursuits,  to  sink 
down  to  a  common  level  or  not  sell  their  products.  For  it  is  a 
well  estabhshed  fact  that  the  products  of  each  nation  repre- 
sent its  civilization,  and  its  social,  intellectual  and  religious 
standing.  And,,  as  the  products  of  labor  constitute  the  germ 
and  extend  the  growth  of  national  prosperity,  they  necessarily 
pay  for  all  things  beneficial  to  mankind  in  the  form  of  direct 
and  indirect  taxation.  Therefore  it  follows  that  the  products 
of  nations  differ  in  cost  of  production  in  proportion  to  their 
different  degrees  of  intelligence  and  social  position.  In  com- 
mercial transactions,  men  buy  where  they  can  buy  cheapest ; 
consequently  the  products  of  the  half  savage  are  taken  in  pref- 
erence to  those  put  upon  the  market  by  more  civilized  nations, 
thereby  forcing  civilization  out  of  the  markets  of  the  world  and 
leaving  its  products  unsold  and  without  price. 


18  PHILOSOPHY  OF  PRICE. 

With  this  view  of  the  question,  price  assumes  a  more 
prominent  position  than  many  have  supposed — a  position  that 
makes  it  the  arbiter  of  our  jovs  and  our  woes,  our  intelligence 
or  degradation.  How  important,  therefore,  is  a  careful  and 
candid  consideration  of  the  subject,  to  the  end  that  we  may  all 
be  benefited,  by  ascertaining,  if  possible,  the  different  factors 
that  enter  into  its  composition. 

Since  ability  to  purchase  makes  the  price,  and  that  com- 
mercial values  are  an  important  factor  in  the  success  or  failure 
of  this  life,  let  us  inquire : 

1.  What  this  ability  to  purchase  is. 

2.  From  what  causes  or  sources  it  originates. 

3.  How  it  is  obtained. 

In  answer  to  the  first  inquiry:  Ability  to  purchase  or 
possess  is  ability  to  labor  and  accumulate  the  products'  of  labor, 
called  wealth. 

In  answer  to  the  second  inquiry :  It  comes  from  the  brain 
and  brawn  of  the  toiling  millions,  and  is  that  jDart  of  invisible 
capital  called  labor,  the  architect  of  all  wealth. 

In  answer  to  the  third  inquiry :  The  ability  to  purchase  or 
possess  is  obtained  by  physical  and  mental  labor  alone. 

No  matter  how  much  political  economists  differ  on  other 
subjects,  they  all  agree  that  labor  is  the  sole  producer  of  wealth. 
This  one  fact  alone  ought  to  place  labor  in  a  position  where  it 
would  receive  the  recognition  and  respect  which  it  so  justly 
deserves.  Instead  of  this  it  stands  on  the  lowest  round  of  the 
social  ladder  witli  every  social  advantage  above  it,  seeking  to 
prevent  its  climbing  liigher.  While  this  is  an  admitted  wrong 
to  labor  which  calls  loudly  for  justice  and  fair  play,  its  condi- 
tion is  not  bettered  nor  are  its  wrongs  righted. 

We  see,  all  about  us,  evidences  of  wealth,  such  as  houses, 
farms,  factories,  railroads,  shops,  etc.,  etc.  These  were  not 
stolen;  neither  are  they  the  spoils  of  war,  nor  the  result  of  fraud 
and  knavery.     We  find  by   tracing  back  the  history  of  each 


WHAT    IT    IS,    AND    HOW    ESTABLISHED.  19 

that  at  the  ultimate  stands  bare-handed  labor ;  that  labor  and  that 
alone  was  the  prime  first  cause — the  fiat  of  it  all.  Then  I  ask: 
Why  should  the  created  dictate  to  the  creator  ?  Why  should  the 
accumulated  products  of  labor  be  placed  at  all  times  and  under 
all  circumstances  above  and  before  labor  itself? 

"VTealth  is  divided  into  two  classes — visible  and  invisible 
The  former  consists  of  money,  houses,  merchandise,  etc.  The 
latter,  of  physical  or  mental  exertion,  stored  up  by  nature  in 
the  human  body  as  a  means  of  seK-preservation.  The  last 
being  the  creator  of  the  first,  as  all  visible  wealth  is  the  pro- 
duction of  the  invisible. 

Some  may  ask  how  this  is  accomplished — how  these,  al- 
most, self-evident  truths  could  remain  undiscovered  all  these 
years  under  the  light  of  modern  civilization — why  have  we  not 
thought  of  them  before?  I  answer  :  Because  as  a  people,  char- 
acteristically, we  are  not  inclined  to  search  for  causes,  but  are 
constantly  looking  for  results  or  effects.  Men  gather  riches; 
nations  become  wealthy.  These  facts  are  plain,  yet  but  very 
few  ever  take  the  trouble  to  examine  into  the  cause.  We  see  a 
new  country  to-day,  ahnost  an  unbroken  forest,  perhaps,  with 
here  and  there  scattered  through  it  a  few  hardy  pioneers. 
Years  afterwards  the  wilderness  has  disappeared.  In  its  place 
we  find  great  cities,  pleasant  villages,  splendid  farms,  costly 
churches,  schools,  and  all  the  numerous  adjuncts  of  civihzation. 
Where  did  they  come  from?  How  came  they  here?  The 
change  seems  impossible,  miraculous;  yet  all  this  is  the  rich, 
ripe  fruit  of  labor,  of  honest  toil. 

We  might,  perhaps  with  profit,  notice  how  this  change 
was  brought  about.  It  should  be  well  understood  as  it  has  been 
nan's  chief  emplopnent  from  the  days  of  Adam. 

Mr.  A  comes  to  this  locality  with  his  family,  and,  as  is 
4ie  usual  custom,  builds  a  log  house  and  goes  to  work,  clearing 
up  his  land.  He  clears  off  a  small  piece  of  land  and  plants  it 
to  crops.     While  they  are  growing  he  makes  more  improve- 


20  PHILOSOPHY    OF    PEICE. 

ments.  His  products  the  first  year  perhaps  feed  and  clothe 
himself  and  family.  Those  of  the  second  year  leave  him  a  sur- 
plus. At  this  time  Mr.  B  makes  his  appearance  with  neither 
shelter  nor  food,  but  is  able  and  willing  to  work.  Mr.  A 
contracts  with  Mr.  B  at  once  to  exchange  some  of  his  visible 
capital,  such  as  corn,  wheat,  and  a  shelter,  for  some  of  Mr.  B's 
invisible  capital  called  labor.  Then  there  are  two  at  work. 
Soon  Mr.  B  has  exchanged  more  of  his  invisible  capital  than  he 
has  consumed  of  visible,  and  finds  himself  the  possessor  of  visi- 
ble capital.  With  this  he  starts  out  for  himself ;  and  in  like 
manner  others  come,  and  make  a  start  in  life,  the  result  being 
that  soon  the  once  dense  forest  is  made  to  blossom  with  evi- 
dences of  visible  wealth  in  every  direction — all  brought  about 
by  that  one  agency — labor. 

Again,  we  find  Mr.  A  with  ten  dollars  in  money,  Mr.  B 
with  ten  bushels  of  wheat,  Mr.  C  with  neither  money  nor  wheat 
and  a  family  to  support.     Mr.  C  wants  bread  to  supply  his 
family.     How  is  he  to  obtain  it?     Let  us  examine.     Mr.  A 
wants  some  wood  cut  for  market.     Mr.  C  engages  to  prepare 
the  wood,  that  is,  he  sells  Mr.  A  ten  dollars'  worth  of  his  invis- 
ible capital.     When  the  labor  is  performed,  or  when  Mr.  A 
has  received  ten  dollars'  worth  of  invisible  capital  from  Mr.  C 
in  the  shape  of  a  certain  number  of  cords  of  wood,  he  remuner- 
ates Mr.  C  with  ten  dollars  in  cash.     This  ten  dollars  Mr.  C 
pays  to  Mr.  B  for  his  ten  bushels  of  wheat  which  Mr.  C's  fam- 
ily at  once  begin  to  consume.     Mr.  A,  l)y  this  transaction,  is 
wealthier  by  the  profit  on  his  wood,  and  Mr.  B  by  the  profit  on 
his  wheat ;  and  the  nation  at  large  is  wealthier  by  the  aggregate 
of  both.     Tliis  process  of  accunmlating  wealth  has  been  going 
on  during  the  liistory  of  the  world,  and  yet,  but  comparatively 
few  persons  either  care  about,  or  know,  the  conditions  and  cir- 
cumstances surrounding  these  ever  present  and  every  day  pro- 
*;eedings. 

From  the  above  conclusions  we  can  clearly  draw  the  infer- 


WHAT  IT  IS  AIS'D  HOW  ESTABLISHED.  21 

ence  that  the  more  Mr.  A  pays  Mr,  C  for  his  labor,  the  more 
Mr.  C  can  pay  Mr.  B  for  his  wheat;  and  the  .more  Mr.  B  re- 
ceives for  his  wheat,  the  more  he  can  expend  for  clothing,  gro- 
ceries, farming  tools,  etc.,  etc.  Here  again  we  are  reminded  of 
the  prominent  position  that  price  occupies  in  all  the  commer- 
•cial  transactions  of  life.  We  notice  that  the  price  of  one  arti- 
<;le — labor — governs  all  other  prices,  in  the  normal  condition  of 
trade,  that  the  products  of  that  labor  come  in  direct  contact 
with.  It  determines  the  price  of  B's  wheat,  and  the  price  of 
his  wheat  determines  the  price  of  all  his  purchases.  The  neces- 
sity of  having  a  fair  price,  and  to  begin  in  the  right  place,  is 
not  only  just,  but  important  to  the  general  welfare  of  mankind. 
That  place  is  with  labor.  When  kbor  brings  a  good  price, 
everything  else  does.  But  when  labor  is  poorly  and  grudgingly 
paid,  dull  times  overtake  us  and  all  business  drags.  Upon 
this  point  rest  several  propositions  of  vital  importance  to  evei7 
individual  and  nation : 

1.  The  degradation  of  every  nation  is  measured  accurately 
by  the  amount  of  the  products  of  its  labor  given  in  exchange 
for  a  dollar,  or  unit  of  their  currency.  The  poorest,  meanest, 
most  servile  and  abject  nation  and  people,  always  have,  and 
always  will,  barter  the  greatest  amount  of  their  products  for  a 
dollar. 

2.  The  civilization,  grandeur,  position  and  social  status  of 
every  nation  is  gauged  absolutely  by  the  amount  of  the  neces- 
sities and  comforts  of  life  that  a  day's  labor  will  purchase  for 
its  people. 

I  bring  as  proof  of  these  assertions  the  wages  received  and 
position  occupied  by  the  people  of  every  nation  on  earth. 
These  propositions  are  too  plain  to  be  disputed.  Compare  the 
low  wages  of  India,  Egypt,  China  and  many  other  countries 
that  might  be  mentioned,  with  the  wages  paid  for  labor  in  the 
United  States,  England,  France,  Germany  and  other  like 
countries,  and  then  note  the  difference  of  their  standing  among 


22  PHILOSOPHY     OF    PEICE. 

the  nations  of  the  world.  The  proof  is  absohite  and  positive. 
Here,  again,  we  find  that  labor  is  the  prime  factor  in  bringing 
about  the  best  interests  of  the  human  family.  Its  only  terms 
for  such  service  is  being  well  paid— that  is,  justly  compens- 
ated. 

In  my  judgment,  the  greatest  error  into  which  the  com- 
mercial world  has  fallen — and  that  eiTor  seems  to  have  made 
way  for  many  others — is,  that  money  buys  or  purchases  prod- 
ucts. This  cannot  be  true.  A  little  candid  consideration  of 
the  question  will  demonstrate  at  once  that  products  always  buy 
or  purchase  money.  The  child  who  sold  his  pennies  for  candy 
was  much  nearer  the  trnth  in  his  ideas  than  his  father  who 
bought  his  coat  with  cash,;  This  point  is  of  the  utmost  import- 
ance in  the  discussion  of  the  question  of  price.  There  may  be 
those  who  will  not  admit  the  correctness  of  this  proposition 
because  it  is  an  innovation  and  somewhat  novel;  besides  it  de- 
molishes at  once  many  oft  quoted  and  long  cherished  theories. 

Let  us  take  the  example  of  the  farmer,  and  inquire  why 
he  raises  wheat.  His  object  is,  iirst  to  feed  liis  own  family, 
and  then  with  the  surplus  he  purchases  money.  Bear  in  mind 
we  are  not  discussing  barter,  but  commercial  transactions  where 
money  is  a  factor.  !N"ow,  if  he  uses  some  of  this  money  to 
pay  his  debts,  he  is  simply  making  a  delivery  of  what  he  had 
sold  and  agreed  to  deliver  some  time  previous.  If  he  wishes 
to  "purchase"  a  wagon,  for  instance,  as  the  phrase  goes  (wi'ong 
nevertheless),  what  factors  enter  into  that  transaction  ? 

The  wagon-maker  has  made  (produced)  a  wagon  to  pur. 
chase  some  money  with,  and  he  buys  as  much  money  of  the 
farmer  as  he  can  for  the  wagon.  A  bargain,  bear  in  mind,  is 
the  result  of  a  mutual  understanding  between  two  or  more 
persons. 

The  farmer  goes  into  the  market  with  liis  money  to  sell 
for  a  wagon.  Tlie  person  who  will  pay  him  the  most  for  his 
money,  that  is,  sell  him  a  wagon  "  the  cheapest,"  as  the  term  is 
used,  will  pureli.'ise  his  money.     The  wagon-maker  ]3ays,  or  sell^ 


"WHAT  IT  IS  AND  HOW  ESTABLISHED.  23 

this  same  money  to  his  workmen  who  had  ah^eady  paid  for  it 
with  labor  by  manufacturino;  the  wao;on.  Here  we  have  traced 
money  from  one  producer  to  another,  and  find  it  does  not  pur- 
chase at  all,  and  in  its  legitimate  use  has  no  purchasing  power, 
as  it  is  a  creation  of  law,  and  not  in  the  true  sense  a  product  of 
labor.  Money  never  goes  in  advance.  Labor  takes  the  lead, 
money  follows.  It  is  the  incentive  for  all  production.  De- 
stroy the  fact  that  production  will  buy  money,  and  to  a  large 
extent  all  surplus  production  will  cease. 

There  is  always  an  obligation  preceding  the  payment  of 
money.  That  obligation  is  either  labor  or  its  products,  or  the 
stipulated  payment  at  some  future  time  of  one  or  both.  As 
before  stated,  money  has  no  purchasing  power ;  its  one  function 
is  to  pay  debts.  It  only  levels  up  the  difference  in  bargains. 
IN^either  can  money  be  bartered  for  money,  because  it  has  only 
the  one  function.  But  products  can  be,  and  often  are,  bartered 
for  each  other,  both  parties  to  the  transaction  being  benefited. 
Here  we  see  products  exercising  purchasing  functions  independ- 
ent and  exclusive  of  money.  But  on  the  other  hand,  money 
cannot  perform  its  functions  without  the  aid  of  products.  Nor 
does  capital  employ  labor.  Labor  employs  capital  always,  but 
does  not  employ  money.  It  only  employs  some  previous  prod- 
uct of  labor.  Money  can  be  utihzed  only  by  the  laborer,  in 
his  vocation,  as  a  medium  to  obtain  some  product  of  labor  that 
he  desires  to  use.  Can  a  man  cut  down  a  tree  with  a  five  dol- 
lar bill  ?  He  will  first  sell  enough  of  his  money  to  obtain  an 
axe,  and  with  that  product  of  labor  cut  down  the  tree.  Capital 
employs  labor  1  jS'ever,  Capital  is  only  sold  for  labor.  That 
is  the  true  and  only  sense  in  which  it  can  be  used.  This 
explains  why  so  much  money  is  idle  in  dull  times.  Men  who 
have  money  part  with  it  for  labor.  In  time  they  buy  money 
with  the  products  of  that  labor.  When  such  products  will  not 
purchase  more  money  than  was  sold  to  purchase  the  labor  in 


24  PHILOSOPHY     OF    PRICE. 

the  first  place,  there  is  a  loss.     When  they  will  bring  more^ 
there  is  a  gain. 

Wages  are  reduced  by  men  going  into  the  market  to  sell 
money  for  labor.  Those  who  will  pay  the  highest  price  for  the 
money,  that  is,  give  the  greatest  amount  of  labor  for  it,  are  sure 
to  get  it.  Hence,  the  strife  among  laborers  to  buy  money 
brings  down  the  price  of  their  own  efforts. 

If  it  were  true  that  money  employs  labor,  then,  with  all 
the  money  hoarded,  labor  would  of  necessity  cease. 

The  fact  is,  a  desire  to  possess  money  in  order  to  gratify 
some  other  desire  in  its  disposal  is  the  main  incentive  to  labor. 
This  incentive  includes  the  natural  disposition  of  mankind  to 
use  all  his  faculties  to  sustain  life. 

We  are  accustomed  to  say  that  money  is  invested  in  prop- 
erty, but  this  is  not  true.  Money  is  no  more  invested  in  prop- 
erty than  the  yard-stick  is  invested  in  the  cloth  that  it  meas- 
ures. When  money  has  passed  from  one  person  to  another, 
either  as  a  loan  or  in  pajnuent  of  property,  it  is  ready  to  be 
lent  again  or  to  be  paid  for  another  piece  of  property.  The 
money  is  no  more  used  up  by  passing  from  one  person  to  an- 
other than  the  yard-stick  is  used  up  by  measuring  a  single  piece 
of  cloth.  We  are  often  told,  in  the  money  articles  of  daily 
newspapers,  that  the  money  of  the  country  has  been  used  up  in 
railroads;  but  upon  traveling  over  these  roads  we  see  evidences 
that  a  great  deal  of  labor  has  been  expended  in  grading  them, 
furnishing  the  iron  and  timber  and  so  forth,  but  we  do  not  see 
any  money.  If  the  money  has  been  invested  in  these  roads,  it 
has  now  gone  somewhere  else;  and  it  is  still  going  to  and  fro  in 
the  earth,  and  up  and  down  it. 

How  true  this  is,  and  yet  how  few  ever  think  of  it  in  this 
light.  In  one  breath  we  hear  men  say :  "  Times  are  hard  be- 
cause the  money  has  been  sunk  in  speculation,"  and  "  there  is. 
just  as  much  money  as  ever  in  the  country  if  it  could  be  found." 

This  places  the  products  of  labor  as  the  ruling  factor  or 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  25 

sole  purchaser.  And  when  products  are  cheap  it  means  that 
money  is  dear,  and  wlien  products  are  dear,  that  money  is 
cheap.  Money  is  inert  matter.  Men  gather  it  together  and 
there  it  remains  until  some  one  wants  it,  and  then  it  is  bought, 
either  with  an  obligation  or  with  labor  and  its  products. 
When  we  take  this  view  of  commercial  relations,  many  of  the 
most  intricate  phases  of  business  are  made  plain.  We  can  then 
discover  the  hidden  sources  from  which  financial  depression, 
low  prices,  and  labor  strikes  emanate ;  and  can  also  catch  a 
glimpse  of  those  fountains  from  which  streams  of  plenty  and 
prosperity  flow. 

This  proposition  clearly  shows  us  where  and  how  to  look 
for  the  true  solution  of  price.  It  enables  us  to  examine  intel- 
ligently one  of  the  most  intricate  subjects  of  economic 
science.  That  products  purchase  money  I  believe  is  a  sound 
doctrine,  and  one  that  will  be  accepted  by  all  writers  and 
thinkers  in  the  near  future. 

In  looking  in  upon  our  social  and  business  relations,  we 
cannot  fail  to  see  the  prominent  position  occupied  by  price. 
It  is  brought  to  our  attention  from  almost  every  direction,  and 
by  the  careful  study  of  almost  every  subject  pertaining  to 
economic  science  ;  in  fact,  upon  it  depends,  to  a  more  or  less  de- 
gree, our  social,  religious  and  commercial  standing.  One  of 
old  said  :  "  Price  is  the  dictator  of  civilization." 

Price,  then,  is  the  value  put  upon  labor  by  the  accumu- 
lated products  of  labor — the  recompense  given  to  m visible 
capital  by  visible  capital.  It  is  the  war  cry  that  gathers  the 
army  of  capital  on  one  side  and  labor  on  the  other,  keeping 
them  in  ahnost  perpetual  strife.  Without  it  the  world  would 
relapse  into  barbarism,  and  the  nations  of  the  earth  would  van- 
ish. Intelligence,  civilization  and  human  progress  would 
cease  forever.  Price  always  should  be  the  cost  of  well-paid 
labor  m  production,  with  reasonable  profits  for  commercial 
exchange.     But  that  is  not  the  case ;  it  is  established  by  con- 


26  PHILOSOPHY     OF    PRICE. 

ditions  entirely  foreign  and  in  no  wise  related  to  the  cost  of 
production. 

A  recent  writer  sums  it  all  up  in  the  following : 

"  The  existing  financial  policy  of  the  world  is  the  same  as 
that  which  in  all  ages  has  given  the  power  of  distributing  the 
products  of  industry  to  non-producers ;  so  that  while  the  great 
bulk  of  all  burdens,^  of  all  miscarriages,  of  all  follies  and  (fiscal) 
crimes  by  government  and  non-producing  classes  fall  upon  the 
industrious  producers,  no  just  share  of  the  distribution  has 
ever  been  made  to  them  ;  on  the  contrary,  the  greater  the  profits 
from  the  distribution  of  productions  the  greater  is  the  contrast 
in  the  division  between  non-producing  distributors  and  the 
producing  industries ;  the  non-producers  take  to  themselves  so 
inordinate  a  proportion  that  the  gap  or  contrast  between  the 
condition  of  distril)Utors  and  producers  in  times  of  prosperity, 
or  seeming  prosperity,  continually  widens ;  the  prodigious  and 
augmenting  wealth  of  the  non-producers  and  the  everlasting 
subjection  of  the  producers  to  the  most  moderate  and  often 
precarious  supplies  of  necessaries. 

The  producing  classes,  the  authors  and  arcliitects  of  all 
wealth,  have  never  in  any  age  been  allowed  the  distribution, 
of  their  own  earnings,  of  the  productions  of  their  industry ; 
nor  in  its  distribution  by  non-producers  have  they  been  allowed 
a  just  share. 

It  has  Ijeen  this  '^creature"  money  which  has  controlled 
the  world ;  this  creature  of  the  law  is  the  sinew  of  war ;  it 
upraises  and  oversets  kingdoms,  empires  and  republics,  a«  in 
time  of  peace  it  dominates  despotically  over  productive  indus- 
tries ;  whosoever  commands  a  man's  purse,  generally  commands 
him.  That  such  is  the  power  of  money,  of  fiscal  legislation,  is 
a  truth,  known  to  all  men." 

But  again,  it  is  also  true  that  the  ability  to  purchase 
depends  entirely  upon  price.  They  are  dependent  upon  each 
other.  When  prices  are  high  it  shows  that  the  ability  to  pur- 
chase is  increasing,  "When  the  ability  to  purchase  is  impaired, 
it  indicates  lower  prices ;  while  the  measure  of  ability  to  pur- 
chase makes  prices  higher  or  lower,  the  high  or  low  price 
clearly  shows  the  degree  of  ability  to  purchase,  AVe  see  from 
this  the  sources  from  which  come  this  ability  to  purchase. 
This  denominator  of  prices,  this  motive  power  of  all  industrial 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  27 

action,  upon  which  the  hopes  and  fears  of  all  nations  are 
placed,  should  be  sought  out,  carefully  nourished  and  con- 
stantly strenffthened.  While  the  accumulation  of  wealth  enters 
into  this  question,  the  distribution  of  wealth  is  the  overshad- 
owing factor.  The  proper  distribution  of  wealth  will  solve 
this  great  problem  of  price.  Nothing  else  will.  When  labor 
and  capital  each  has  its  just  due — when  one  cannot  dictate  to 
the  other — then  will  the  idea  of  price  be  fairly  and  fully 
appreciated.  Further;  price,  in  other  words,  is  the  expression 
in  money  terms  of  the  relation  which  the  unit  of  money  beai*s 
to  a  specified  quantity,  or  to  the  unit  of  each  and  every  other 
thing  in  exchange.  It  is  also  the  expression  in  units  of  prop- 
erty and  services  of  the  value  of  the  unit  of  money,  and  with- 
out having  any  influence  on  the  relations,  is  the  sure  indicator 
of  the  exchange  relations  which  the  units  of  all  other  things 
bear  to  each  other.  Market-price  is  the  expression  in  the  units 
of  money  of  an  equihbrium  between  the  correlative  demands 
of  buyer  and  seller.  It  is,  in  fact,  generally  estabhshed  through 
a  competition  between  sellers,  rather  than  buyers ;  the  market- 
price  of  any  article  being  the  smallest  quantity  of  money  for 
which  the  unit  of  such  an  article  is  offered  for  sale  in  open 
market.  By  the  word  unit,  when  apiDlied  to  money,  is  intended 
that  denomination  in  which  accounts  are  kept,  and  in  which 
judgments  are  rendered  for  money,  as  the  dollar  in  this  country 
and  the  pound  sterling  in  England.  By  the  same  word,  as 
applied  to  commodities,  is  intended  that  specific  portion  or 
quantity  by  multiples  or  fractions  of  which  all  quantities  are 
accustomed  to  be  described,  as  a  ton  for  coal,  or  a  yard 
for  cloth.  The  relations  in  exchange  of  all  other  things 
than  money  are  not  at  all  affected  by  the  volume  of  money,  or 
by  its  increase  or  decrease.  Nor  do  changes  in  the  volume  of 
money  practically  affect  a  transaction  wherein  a  seller  of  prop- 
erty makes  immediate  purchase  of  other  proj)erty  with  the  pro- 
ceeds of  such  sale.     Exchange  by  barter  can  be  as  equitably 


28  PHILOSOPHY  OF  PKICE. 

effected  under  one  vohime  of  money,  and  under  one  range  of 
prices,  as  another.  But  under  a  credit  system,  where  contracts 
aggregating  a  vast  amount,  to  pay  money  at  future  periods,  have 
been  made,  steadiness  in  prices  becomes  the  all-important  con- 
sideration, and  that  steadiness  depends  on  the  steadiness  in  the 
quantitative  relation  between  money  and  all  other  things.  The 
performance  of  contracts  to  deliver  commodities  or  render 
services  is  not  made  either  less  or  more  difficult  by  an  increase 
or  decrease  in  the  volume  of  money.  But  nearly  all  contracts 
in  the  commercial  world  are  for  the  future  dehvery  of  money, 
and  the  consideration  received  and  the  promise  made  in  such 
contracts  are  based  on  existing  prices.  The  command,  there- 
fore, which  commodities  and  services  may  have  over  money 
in  the  future,  and  which  will  find  its  expression  in  price, 
becomes  a  matter  of  vital  importance. 

Whenever  under  any  firmly-established  government  a 
system  of  money  has  been  generally  accepted,  the  value  of 
each  unit  of  such  money  becomes  a  general  mental  conception, 
which,  if  it  be  what  is  called  a  value,  or  metallic  money,  is  not 
based  on  the  past  or  probable  future  cost  of  j^roducing  the 
material  of  which  it  is  composed,  nor  on  the  average  cost  of 
its  production,  nor  on  the  cost  of  its  production  in  either 
the  most  or  least  prolific  mine.  Nor,  if  it  be  what  is  called 
credit-money,  having  full  legal-tender  functions,  is  that  portion 
of  it  which  is  unhoarded  and  in  circulation  and  performing  the 
functions  of  money,  based  upon  the  present  value  of  the 
promise  of  the  issuer  to  redeem  it,  nor  upon  the  proximity  or 
remoteness  of  such  redemption. 

Under  firnily-estal)lished  systems  the  value  of  each  unit  of 
either  metallic  or  paper  money  depends  absolutely  upon  the 
number  of  such  units  and  the  relation  they  bear  to  the  services 
they  are  required  to  perform. 

It  is  the  limitation  of  the  quantity  of  money  without 
reference  to  its  cost  of  production  that   regulates   the   value 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  29 

of  each  unit  of  money,  whether  it  be  paper  or  meta.^.c.  In  the 
instance  of  paper  money,  limitation  is  imposed  by  law ;  in  that 
of  metallic  money  it  is  imposed  by  nature.  The  effect  in  each 
case  is  precisely  the  same.  In  the  one  this  limitation  is  regu- 
lated by  the  wisdom  and  judgment  of  men ;  in  the  other 
by  the  numerous  obstacles  which  nature  throws  in  the  way 
of  production.  The  value  of  money,  of  whatever  kind,  is 
measured  by  the  cost  of  obtaining  it  afte?'  it  has  been  produced, 
and  not  by  the  expense  of  its  production  ;  and  this  value  is  cor- 
rectly indi(;ated  by  the  general  range  of  prices.  Hence  thf^ 
truth  of  this  proposition:  Price  is  commercial  value  and  is  fully 
established  by  the  ability  of  the  people  to  purchase,  and 
that  abihty  is  greater  or  less  as  the  volume  of  currency  is 
increased  or  decreased. 


30  PHILOSOPHY    OF    PRICE 


CHAPTER  II. 

PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY. 

The  proposition  sought  to  be  made  plain  and  substantiated 
beyond  contradiction  in  this  chapter  is,  that  price,  or  commer 
cial  value,  depends  entirely — excepting  in  cases  of  a  sudden 
demand  or  an  unexpected  deficiency — upon  the  amount  of  cir- 
culating medium  in  the  country  where  the  price  is  established  ; 
this  circulating  medium  always  controlling  the  ability  to 
purchase.  That  with  an  increase  of  currency  prices  advance, 
while  with  a  decrease  they  fall.  That  this  has  been  true  in 
ages  past  I  will  call  economic  history  to  verify.  That  it  is 
proving  true  at  the  present  time  I  will  bring  our  own  condition 
as  a  nation  to  testify. 

The  volume  of  currency  indicates  the  purchasable  quantity 
which  can  be  distrilnited  for  labor  and  its  products.  The 
greater  that  amount,  the  more  can  be  distributed  ;  the  less  that 
amount,  the  less  can  be  distributed.  Money,  or  currency,  is  a 
medium  of  exchange,  and  also  a  measure  of  value  for  the  pur- 
pose of  ■  exchange.  These  were  the  original  and  primitive 
functions  of  money ;  and  anything  that  l)y  common  consent 
performs  these  functions  was  and  is  money.      The  age  has 


PRICE  AND  ITS  DEPENDENCE  UPON  CUEKENCY.  31 

passed  when  kings  rule  by  divine  right ;  also  the  time  has  gone 
by  when  any  particular  creation  of  Deity  is  recognized  as  the 
only  material  out  of  which  money  can  be  made.     Money  has 
come  to  be  known  as  purely  a  creation  of  law ;  that  the  fiat  or 
command  which  clothes  it  with  these  functions  is  simply  the 
recognized  sovereignty  of  government ;  that  the  material  out  of 
which  it  is  made  is  commodity,  and  only  valued  as  such.     In 
tracing  this  back  we  find  barte?\  an  exchange  between  individ- 
uals and  tribes.     As  barter  increased,  the  necessity  for  some- 
thing to  make  up  the  difference  in  labor  value  between  articles 
exchanged  became  apparent.     Necessity  compelled  it,  and,  as 
has  been  the  custom  of  mankind,  it  was  found.     Yarious  expe- 
dients were  resorted  to — skins  of  beasts,  shells,  cattle,  iron, 
porcelain,  copper,  brass,  silver  and  gold,  all  have  had   their 
turn ;  but  in  each  and  every  case  the  commercial  value  of  all 
products  was  given  as  a  certain  multiple  or  division  of  the  unit 
of  whatever  was  used  as  money.     For  example,  in  this  country 
the  commercial  value  of  articles  is  reckoned  either  as  multiples 
or  divisions  of  the  dollar ;  in  England,  the  same  with  the  pound 
sterling ;  in  France,  with  the  franc.     But,  in  all  these  the  busi- 
ness or  barter  had  been  conducted,  as  regards  buying  and  sell- 
ing,'by  common  consent.     But  human  jirogress  ascertained  in 
the  course  of  time  that  this  money  should  have  another  func- 
tion, a  debt  paying  power.     This  was  given  it  by  law. 

l!^ow  we  consider  money  in  our  business  transactions  as  a 
legal  tender  for  the  payment  of  debts.  This  legal  tender  func- 
tion is  given  it  by  law ;  consequently  money,  as  used  to-day, 
is  simply  and  only  the  creation  of  law,  as  I  stated  before. 

Money  has  no  purchasing  power,  but  when  once  the  bar- 
gain is  consummated  money  steps  in  and  liquidates  the  deljt. 

If  money  had  purchasing  power  it  would  be  simply  con- 
fiscation, as  it  would  then  have  the  functions  both  to  possess 
and  remunerate.  This  has  been  wiselv  withheld.  Lesral 
tender  money  being  the  creation  of  law,  it  therefore  follows 


32  PHILOSOPHY    OF     PRICE. 

tliat  the  same  power  giving  it  its  legal  tender  ]3roperties  can 
designate  its  sliape,  form,  and  consistency. 

Here  we  meet  with  various  theories,  some  wild,  others  rea- 
sonable, all  honest.  Some  would  confine  the  unit  of  currencv 
to  a  certain  quantity  of  gold  and  silver.  Others  would  use 
copper,  iron,  or  brass ;  again,  others  would  use  the  faith 
and  integrity  of  the  nation  stamped  upon  paper.  There  may 
be  objections  to  all  these,  but  in  my  judgment  the  last  is  by 
far  the  most  preferable. 

No  matter  what  this  medium  of  exchauije  is,  no  matter 
what  the  fiat  or  authority  of  law  determines  is  money,  the 
great  question  after  all  is  its  quantity. 

The  truth  is,  the  most  enormous  power  known  to  man,  or 
that  ever  can  be  liis,  lies  in  money — in  the  increase  and  decrease 
of  its  quantity.  It  is  the  tide  of  human  affairs  upon  which  all 
things  must  rise  or  sink.  It  is  inevitable  and  cannot  be  re- 
sisted. This  power  has  been  obtained  through  the  carelessness 
of  the  people,  who  have  been  and  are  now  held  in  ignorance 
for  that  very  purpose.  So  early  as  1557  we  find  the  keen  and 
piercing  intellect  of  Bodin  saying  the  following : 

"For  men  have  so  well  obscured  \}i\Q. facts  about  money  that 
the  great  part  of  the  people  do  not  see  them  at  all.  The  money- 
ers  do  as  the  doctoi's  do,  who  talk  Latin  before  women,  and  use 
Greek  characters,  Aral)  words,  and  Latin  abl)reviations,yr^//v';?^ 
that  if  the  people-  understood  their  receipts  they  would  Hot  have 
much  opinion  of  them." 

What  was  true  then  is  practised  now.  Take  the  financial 
reports  of  Congress ;  there  is  not  one  person  in  a  hundred  v\-]io 
can  read  them  understandingly.  They  are  M^ritten  so  purposely ; 
that  the  people  may  become  disgusted  and  dislieartened  trying 
to  decipher  them,  conclude  the  subject  is  too  deep  for  their 
intellect,  and  leave  it  for  others  to  interpret.  This  is  exactly 
the  end  sought  and  will  continually  liring  distress  iipon  the  na- 
tion. If  the  plain  people  of  the  country  could  have  these 
questions    fully    and    simply    explained,    there     would     be 


PKICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  33 

many    vacant    seats    soon    among    our    present    law-makers. 

Whenever  prices  have  become  adjusted  to  a  given  amount 
of  currency,  an  increase  of  that  amount,  other  things  remain- 
ing unchanged,  will  cause  a  rise,  and  decrease  will  cause  a  fall, 
in  prices.  But  under  such  conditions  other  things  never  do 
remain  unchanged.  There  are  powerful  causes,  moral  and  ma- 
terial, which  invariably  operate,  when  money  is  increasing  in 
volume,  to  moderate  the  rise  in  prices,  and  to  intensify  their 
fall  when  it  is  decreasing.  Hence,  the  fall  in  prices  caused  by 
a  decreasing  volum.e  of  money  would  be  much  greater  in  degree 
than  would  be  the  rise  caused  by  a  proportionately  increasing 
volume. 

"Whenever  it  becomes  apparent  that  prices  are  rising  and 
money  falling  in  value  in  consequence  of  an  increase  of  its  vol- 
ume, the  greatest  activity  takes  place  in  exchanges  and  productive 
enterprises.  Everyone  becomes  anxious  to  share  in  the  advan- 
tages of  rising  markets.  The  inducement  to  hoard  money  is 
taken  away,  and  consequently  the  disposition  to  hoard  it  ceases. 
Its  circulation  becomes  exceedingly  active,  and  for  the  very 
plain  reason  that  there  could  be  no  motive  for  holding  or  hoard- 
ing money  when  it  is  falling  in  value,  while  there  would  be 
the  strongest  possible  motive  for  exchanging  it  for  property, 
or  the  labor  which  creates  property,  when  prices  are  rising. 
Under  these  circumstances  labor  comes  into  great  demand  and 
at  remunerative  wages.  This  results  in  not  only  increased  pro- 
duction, but  increased  consumption,  as  the  wants  and  expend- 
itures of  laborers  increase  with  their  earnings. 

I  quote  the  following  from  the  report  of  the  silver  com- 
mission appointed  in  1876: 

"At  the  Christian  era  the  metallic  money  of  the  Roman 
Empire  amounted  to  81,800,000,000.  By  the  end  of  the 
fifteenth  century  it  had  shrunk  to  less  than  |200,000,000. 
During  this  period  a  most  extraordinary  and  baleful  change 
took  place  in  the  condition  of  the  world. 

Population  dwindled  and  commerce,  arts,  wealth,  and  free- 


34  PiriLOSOi'HY  f)F-PIiICE. 

dom,  all  disappeared.  The  people  were  reduced  by  poverty 
and  misery  to  the  most  degraded  conditions  of  serfdom  and  sla- 
very. The  disintegration  of  society  was  almost  complete. 
The  conditions  of  life  were  so  hard  that  individual  selfishness 
was  the  oidy  thing  consistent  with  the  instinct  of  self-preserva- 
tion. All  public  spirit,  all  generous  emotions,  all  the  noble  as- 
pirations of  man,  shriveled  and  disappeared  as  the  volume  of 
money  slirimk  and  prices  fell. 

History  records  no  such  disastrous  transition  as  that  from 
the  Koman  Empire  to  the  Dark  Ages.  Various  explanations 
have  been  given  of  this  entire  breaking  down  of  the  frame- 
work of  society,  but  it  was  certainly  coincident  with  a  shrink- 
age in  the  volume  of  money,  which  M^as  also  without  historical 
parallel.  The  crumbling  of  institutions  kept  even  step  and 
pace  with  the  shrinkage  in  the  stock  of  money  and  the  falling 
of  prices.  All  other  attendant  circumstances  than  these  last 
liave  occurred  in  other  historical  periods  unaccompanied  and 
unfollowed  by  any  such  mighty  disasters.  It  is  a  suggestive 
coincidence  that  the  first  glimmer  of  light  only  came  with  the 
invention  of  lulls  of  exchange  and  paper  substitutes,  through 
which  the  scanty  stock  of  the  precious  metals  was  increased  in 
efficiency.  But  not  less  than  the  energizing  influence  of 
Potosi  and  all  the  argosies  of  treasure  from  the  New  World 
were  needed  to  arouse  the  Old  World  from  its  comatose  sleep, 
to  quicken  the  torpid  limbs  of  industry,  and  to  plume  the 
leaden  wings  of  conmierce.  It  needed  the  heroic  treatment  of 
rising  prices  *to  enable  society  to  reunite  its  shattered  links,  to 
shake  off  the  shackles  of  feudalism,  to  relight  and  uplift  the 
almost  extinguished  torch  of  civilization.  That  the  disasters  of 
the  Dark  Ages  were  caused  by  decreasing  money  and  falling 
prices,  and  that  the  recovery  therefrom  and  the  comparative 
prosperity  which  followed  the  discovery  of  America  were  due 
to  an  increjising  8ui|)ply  of  the  precious  metals  and  rising  prices, 
will  not  seem  surprising  or  unreasonable  when  the  noble  func- 
tions of  money  are  considered. 

Money  is  the  great  instrument  of  association,  the  very 
fiber  of  social  org:inisni,  the  vitalizing  force  of  industry,  tlie 
protoplasm  of  civilization,  and  as  essential  to  its  existence  as  ox- 
ygen is  to  animal  life.  Without  money  civilization  coidd  not 
have  liad  a  beginning;  with  a  diminishing  su^jply  it  must  lan- 
guish, and,  unless  relieved,  finally  perish. 

Symptoms  of  disasters  similar  to  those  which  befell  society 
during  the  Dark  Ages  were  observable  on  every  liand  during 
the  first  half  of  the  century.     In  1809  the  revolutionary  troub- 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  35 

les  "between  Spain  and  her  American  colonies  broke  out. 
These  troubles  resulted  in  a  great  diminution  in  the  production 
of  the  precious  metals,  which  was  quickly  indicated  by  a  fall 
in  general  prices.  As  already  stated  in  this  report,  it  is  estimat- 
ed that  the  purchasing  power  of  the  precious  metals  increased 
between  1809  and  ISiS  fully  145  per  cent.,  or,  in  other  words, 
that  the  general  range  of  prices  was  60  per  cent,  lower  in  1848 
than  it  was  in  1809.  During  this  period  there  was  no  general 
demonetization  of  either  metal  and  no  important  fluctuation  in 
the  relative  value  of  the  metals,  and  the  supply  was  sufficient 
to  keep  their  stock  good  against  losses  by  accident  and  abrasion. 
But  it  was  insufficient  to  keep  the  stock  up  to  the  proper  cor- 
respondence with  the  increasing  demand  of  advancing  popula- 
tions. The  world  has  rarely  passed  through  a  more  gloomy 
period  than  this  one.  Again  do  we  find  falling  prices  and 
misery  and  destitution  inseparable  companions.  The  poverty 
and  distress  of  the  industrial  masses  were  intense  and  univer- 
sal, and  since  the  discovery  of  the  mines  of  America,  without  a 
jDarallel.  In  England  the  suiferings  of  the  people  found  ex- 
pression in  demand  upon  Parliament  for  relief,  in  bread-riots 
and  in  immense  Chartist  demonstrations.  The  military  arm  of 
the  nation  had  to  be  strengthened  to  prevent  the  all-prevading 
discontent  from  ripening  into  open  revolt.  On  the  Continent 
the  fires  of  revolution  smoldered  everywhere  and  blazed  out  at 
many  points,  threatening  the  overthrow  of  States  and  the  sub- 
version- of  social  institutions.  Whenever  and  wherever  the 
mutterings  of  discontent  were  hushed  by  the  fear  of  increased 
standing  armies,  the  foundations  of  society  were  honey-combed 
by  powerful  secret  political  associations.  The  cause  at  work  to 
produce  this  state  of  things  was  so  subtle,  and  its  advance  so 
silent,  that  the  masses  were  entirely  ignorant  of  its  nature. 
They  had  come  to  regard  money  as  an  institution  fixed  and  im- 
movable in  value,  and  when  the  price  of  property  and  the 
wages  of  labor  fell,  they  charged  the  fault,  not  to  the  money, 
but  to  the  property  and  tlie  employer.  They  were  taught  that 
the  mischief  was  the  result  of  overproduction.  Never  having 
observed  that  overproduction  was  complained  of  only  when  the 
money  stock  was  decreasing  their  prejudices  were  aroused 
against  labor-saving  machinery.  They  were  angered  at  capital, 
because  it  either  declined  altogether  to  embark  in  industrial 
enterprises  or  would  only  embark  in  them  upon  the  condition 
of  employing  labor  at  the  most  scanty  remuneration.  They 
forgot  that  falling  prices  compelled  capital  to  avoid  such  enter- 
prises on  any  other  condition,  and  for  the  most  part  to  avoid 


36  PHILOSOPHY    OF    PRICE. 

them  entirely.  They  did  not  comprehend  that  money  in 
shrinking  vohime  was  the  prolific  parent  of  enforced  idleness 
and  poverty,  and  that  falling  prices  divorced  money,  capital, 
and  labor,  bnt  they  none  the  less  felt  the  paralyzing  pressure  of 
the  shrinking  metallic  shroud  that  was  closing  around  industry. 

The  increased  jield  of  the  Kussian  gold-fields  in  1846  gave 
some  relief,  and  served  as  a  parachute  to  the  fall  in  prices, 
which  might  otherwise  have  resulted  in  a  great  catastrophe. 
But  the  enormous  supplies  of  gold  from  California  and  Australia 
were  all  needed  to  give  substantial  and  adequate  relief.  Great 
as  these  supplies  were,  their  influence  m  raising  prices  was  mod- 
erated and  soon  entirely  arrested  by  the  increasing  populations 
and  commerce  which  followed  them.  In  the  twenty-five  years 
between  1850  and  1876  the  money  stock  of  the  world  was 
more  than  doubled,  and  yet,  at  no  time  during  this  period  was 
the  general  level  of  prices  raised  more  than  18  per  cent,  above 
the  general  level  in  1848.  A  comparison  of  this  effect  of  an 
increasing  volume  of  money  after  1848  with  the  effect  of  a  de- 
creasing volume  between  1809  and  1848  strikingly  illustrates 
how  largely  different  in  degree  is  the  influence  upon  prices  of 
an  increasino;  or  decreasino;  volume  of  money.  The  decrease 
of  the  yield  of  the  mines  since  about  1865,  while  population 
and  connnerce  have  been  advancing,  has  already  produced  un- 
mistakable symptoms  of  the  same  general  distrust,  non-employ- 
ment of  labor,  and  political  and  social  disgust  which  have  char- 
acterized all  former  periods  of  shrinking  money."' 

"It  is  in  a  volume  of  money  keej^ing  even  pace  with  ad- 
vancing population  and  commerce,  and  in  the  resulting  steadi- 
ness of  prices,  that  the  wholesome  nutriment  of  a  healthy 
vitality  is  to  be  found.  The  highest  moral,  intellectual,  and 
material  development  of  nations  is  promoted  by  the  use  of 
nu>ney  unchanging  in  its  vahie.  That  kind  of  money,  instead 
of  })eing  the  oppressor,  is  one  of  the  great  instrumentalities  of 
commerce  and  industry.  It  is  as  profitless  as  idle  machinery 
when  it  is  idle;  differing  from  all  other  agencies,  it  cannot 
benefit  its  ownier  except  when  he  parts  with  it.  It  is  only  un- 
der steady  prices  that  the  production  of  wealth  can  reach  its 
permanent  maximum,  and  that  its  equitable  distrilnition  is  pos- 
sible. Steadiness  in  prices  insures  labor  to  all  and  exacts  labor 
from  all.  It  gives  security  to  credit  and  stability  and  prosperi- 
ty to  l)usiness.  It  encourages  large  enterprises,  requiring  time 
for  their  development,  and  crowns  witli  success  well  matured 
and  carefully  executed  plans.  It  discourages  purely  speculative 
ventures,  and  especially  those  based  upon" disaster.     It  encour- 


PRICE  AND  ITS  DEPEND EXCE  UPON  CUREENCY.  37 

ages  actual  transactions  rather  tlian  gambling  on  futnre  prices. 
It  metes  out  justice  to  both  debtor  and  creditor,  and  secures 
credit  to  those  who  deserve  it.  It  prevents  capital  from  oi> 
pressing  labor  and  labor  from  oppressing  capital,  and  secures 
to  each  the  just  share  of  the  fruits  of  industry  and  enterprise. 
It  secures  a  reasonable  interest  for  its  use  to  the  lenders  of 
money,  and  a  just  share  in  the  profits  of  production  to  the  bor- 
rower. It  keeps  up  the  distinction  between  a  mortgage  and  a 
deed.  It  insures  a  moderate  competence  to  the  many  rather 
than  colossal  fortunes  to  the  few  at  the  expense  of  the  many." 

It  may  be  imjDOSsible  to  devise  any  system  through  which 
the  volume  of  money  shall  always  increase  or  decrease  in  cor- 
responding ratio  to  the  increase  or  decrease  of  all  those  things 
to  measure  which  is  its  function.  If  it  lie  admitted  that  the 
volume  of  money  should  increase  in  proportion  with  either 
wealth,  commerce,  or  population,  the  least  measure  of  increase 
would  be  that  based  on  population,  as  in  commercial  countries 
both  wealth  and  exchanges  are  multiplied  more  rapidly  than 
population.  The  narrower  measure  of  increase  would  probably 
be  the  more  accurate  one,  as  the  thing  to  be  measured  and 
which  it  is  important  should  have  an  unvarying  value  is  human 
effort,  and  as  that  can  neither  be  increased  nor  diminished  ex- 
cept through  an  increase  or  diminution  of  tlie  population,  it 
would  seem  that  the  volume  of  money  should  only  vary  with 
population. 

As  steadiness  in  prices,  which  depends  on  steadiness  in 
the  relation  between  money  and  all  other  things,  is  essential  to 
prosperity,  it  follows  that  in  any  change  in  money-systems  the 
volume  of  the  new  money,  that  is  to  say,  the  number  of  units 
of  the  new  money  issued,  should  if  possible  l)e  neither  greater 
nor  less  than  the  number  of  units  in  circulation  at  the  time  of 
the  change.  A  strict  observance  of  this  nile,  whatever  may  be 
the  material  of  money,  will  prevent  any  general  rise  or  fall  in 
prices. 

The  quantity  of  metallic  money,  or  of  paper  money  con- 
stantly convertible  into  metallic  money,  which  can  be  main- 


38  PHILOSOPHY  OF   PRICE. 

tained  in  circulation  of  any  particular  country  cannot  be  con- 
trolled  arbitrarily.  It  cannot  l^e  greater  than  such  an  amount 
as  may  be  requisite  to  maintain  the  prices  of  such  country  at  a 
substantial  parity  with  the  prices  of  all  other  countries  using 
the  same  kind  of  money.  Any  change  from  this  amount  must 
be  temporary,  and  will  be  soon  automatically  corrected  by  the 
course  of  exchange. 

The  volume  of  inconvertible  paper  money,  on  the  contrary, 
is  local  to,  and  subject  to  the  control  of,  the  country  issuing  it, 
and  should  be  regulated  solely  with  reference  to  existing  prices, 
and  consequently  should  be  neither  increased  nor  diminished, 
except  in  correspondence  with  changes  in  population  and  com- 
merce. 

The  rates  of  interest  for  money  are  not  lowered  by  increas- 
ing its  quantity.  It  is  prices,  and  not  interest,  which  depend 
upon  the  volume  of  money.  The  rates  for  the  use  of 
loanable  capital  depend  upon  entirely  different  factors — such 
as  the  current  rates  of  business  profits,  productiveness  of  the 
soil,  the  security  of  property,  the  stability  of  government,  pres- 
sure of  taxation,  and  the  fiscal  policies  of  governments  such 
as  the  maintenance  of  public  debts,  which  necessarily  increase 
the  rate  of  interest.  In  truth,  increasing  the  amount  of  money 
tends  indirectly  to  increase  the  rate  of  interest  by  stimulating 
business  activity,  while  decreasing  the  amount  of  money 
reduces  the  rate  of  interest  by  checking  enterprises  and  thereby 
curtailing  the  demand  for  loans.  This  is  signally  illustrated 
by  the  present  condition  of  things  in  every  part  of  the  comm.er- 
cial  world.  The  rate  of  interest  should  be,  and  under  a  correct 
money  system  would  l)e,  merely  an  expression  of  the  rate 
of  profit  which  could  be  made  through  the  use  of  borrowed 
capital. 

While  the  volume  of  money  is  decreasing,  even  although 
very  slowly,  the  value  of  each  unit  of  money  is  increasing 
in  corresponding  ratio,  and  projierty  is  falling  in  price.    Those 


PRICE  AND  ITS  DEPENDENCE  UPON  oCERENCY.  39 

who  have  contracted  to  pay  money  find  that  it  is  constantly 
becoming  more  difficult  to  meet  their  engagements.  The 
margins  of  securities  melt  rapidly  away,  and  the  confiscation 
by  the  creditor  of  the  property  on  which  they  are  based  becomes 
only  a  question  of  time.  All  productive  enterprises  are  dis- 
couraged and  stagnate  because  the  cost  of  producing  commodi- 
ties to-day  will  not  be  covered  by  the  prices  obtained  for  them 
to-morrow.  Exchanges  become  sluggish,  because  those  who 
have  money  will  not  part  with  it  for  either  property  or  services, 
beyond  the  requirements  of  actual  current  necessities,  for  the 
obvious  reason  that  money  alone  is  increasing  in  value,  while 
everything  else  is  declining  in  price.  This  results  in  the  with- 
drawal of  money  from  the  channels  of  circulation,  and  its 
deposit  in  great  hoards.  This  hoarding  of  money,  from  the 
nature  of  things  must  continue  and  increase,  not  only  until  the 
shrinkage  of  its  volume  has  actually  ceased,  but  until  capitalists 
are  entirely  satisfied  that  money  lying  idle  on  special  deposit 
will  no  longer  afford  them  revenue,  and  that  the  lowest  level 
of  prices  has  been  reached.  It  is  this  hoarding  of  money,  when 
its  volume  shrinks,  wliich  causes  a  fall  in  prices  greater  than 
would  be  caused  by  the  direct  effect  of  a  decrease  in  the  stock 
of  money.  Money  in  shrinking  volume  becomes  the  para- 
mount object  of  commerce  instead  of  its  beneficent  instrument. 
Instead  of  mobilizing  industry,  it  poisons  and  dries  up  its  life- 
currents.  It  is  the  fruitful  source  of  political  and  social 
disturbance.  It  foments  strife  between  labor  and  other  forms 
of  capital,  while  itself  hidden  away  in  security  gorges  on  both. 
It  rewards  close-fisted  lenders  and  filches  from  and  bankrupts 
enterprising  borrowers.  It  circulates  freely  in  the  stock 
exchange  but  avoids  the  labor  exchange.  It  has  in  all  ages  been 
the  worst  enemy  with  which  society  has  had  to  contend,  while 
its  legitimate  function  is  to  benefit  society. 

The  great  and  still  continuing  fall  in  prices  in  the  United 
States  has  proved  most  disastrous  to  nearly  every  industrial 


40  PHILOSOPHY  OF   PRICE. 

enterprise.  Tlie  bitter  experience  of  the  last  few  years  has  been 
an  expensive  but  most  thorongh  teacher.  It  has  taught  capital- 
ists neither  to  invest  in  nor  loan  money  on  such  eriterprises, 
and  just  as  thoroughly  has  it  taught  business  men  not  to  borrow 
for  the  purpose  of  inaugurating  or  prosecuting  them.  Of  the 
few  business  enterprises  now  being  successfully  prosecuted, 
the  larger  part  are  based  on  a  monopoly  secured  either  by  pat- 
ents or  exceptional  conditions.  The  business  man  has  discov- 
ered that  the  less  active  and  enterprising  he  is  the  better  he  is 
off.  Tlie  manufacturer  avoids  loss  by  dainping  down  furnace- 
fires  and  slowing  do-svn  machinery. 

The  mining  companies  would  find  profit  in  inactivity,  and 
would  probably  suspend  operations,  were  it  not  for  the  great 
loss  they  would  sustain  in  doing  so.  Mines  can  be  properly 
opened  only  through  a  great  outlay  of  capital,  which  would  be 
practically  lost  if  they  were  closed  down  for  any  considerable 
period  of  time.  The  filling  up  with  water,  the  caving  in 
of  galleries,  the  crushing  in  of  shafts,  the  rusting  of  machinery, 
and  the  general  disarrangement  of  their  interior  workings 
would  require  for  their  repair  a  not  much  less  expenditure 
than  was  necessary  for  their  original  opening.  Hoping  for  bet- 
ter times,  they  therefore  struggle  on  against  an  adverse  current, 
without  profit  and  generally  only  without  loss  by  reducing  their 
miscellaneous  expenditures  to  the  lowest  possible  point  and 
wages  to  a  starvation  level.  The  miners  ascend  from  the  dark 
and  gloomy  depths  of  the  mine  with  their  scanty  pittance, 
called  wages,  to  find  in  a  famishing  household  a  glooili  that 
is  more  profound. 

The  stockholders  of  railroads  have  suffered  a  vast  shrink- 
age in  the  value  of  their  property  and  in  the  volume  of  their 
traffic  and  in  rates  of  transportation,  while  their  debts  have 
remained  nominally  the  same  but  really  increasing.  In  order 
to  make  their  decreased  receipts  meet  the  interest  on  their 
bonds,  they  are   forced  to   reduce  their  operating  expenses 


PKICE  AKD  ITS  DEPENDENCE  UPON  CURKENCY.  41 

to  the  lowest  possible  point.  Their  struggles  seem  to  be  in 
vain,  and  unless  that  system  can  be  changed  which  is  making 
each  dollar  which  they  owe  more  valuable,  and  at  the  same 
time  causing  a  slirinkage  in  their  business,  and  which  is  chain- 
ing labor  and  all  other  forms  of  capital  to  the  chariot- wheels  of 
money-capital,  they  will,  one  after  another,  be  swallowed  by 
the  bondholders.  In  the  end  the  stockholders  will  be  entirely 
out  of  the  account,  and  the  contest  will  be  between  different 
classes  of  bondholders,  if  that  can  be  called  a  contest  where 
victory  is  assured  in  advance  to  the  liens  which  have  priority. 

Farmers  whose  lands  are  not  mortgaged,  and  their  employes 
who  at  least  are  insured  against  absolute  want,  best  escape  the 
evils  of  tlie  times,  but  the  prices  of  agricultural  products  must 
finally  decline  with  the  reduction  in  the  ntmiber  and  means  of 
the  consumers.  The  tendency  of  falKng  prices  is  to  break 
down  the  vast  diversified  interests  of  the  country,  and  to  force 
a  constantly  increasing  proportion  of  the  population  into 
the  one  single  primitive  industry  of  cultivating  the  soil.  The 
United  States,  instead  of  containing  a  highly  commercial 
and  manufacturing  nation,  will,  until  falling  prices  are  checked, 
become  more  and  more  exclusively  agricultural  and  pastoral. 

Securities  have  already  become  so  impaired  through  falling 
prices  that  loanable  capital  has  fled  affrighted  from  the  newer 
and  more  sparsely  settled  sections  of  the  country  and  accumu- 
lated in  large  amounts  in  the  great  financial  centers  where 
securities  are  more  ample.  The  personal  and  property  securities 
of  individuals  have  generally  ceased  to  be  available,  except  at 
the  highest  rates  of  interest,  or  at  ruinously  low  valuations. 
Money  can  be  borrowed  readily  only  upon  such  securities  as 
bonds  which  are  hased  on  the  unlimited  tax-levying  poioer  of 
the  government,  or  upon  the  bonds  and  stocks  of  first-class 
trunk-lines  of  railroad  corporations,  whose  freight  and  fare  rates 
are  practically  a  tax  upon  the  entire  population  and  resources 
of  the  regions  which  they  traverse  and  supply.  The  competition 


42  PHILOSOPHY    OF    PRICE. 

among  capitalists  to  loan  money  on  these  more  ample  securities 
has  become  very  keen,  and  such  securities  command  money  at 
unprecedentedly  low  rates.  These  low  and  lowering  rates  of  inter- 
est, instead  of  denoting  financial  strength  and  industrial  prosper- 
ity, are  a  gauge  of  mcreasmg prostf'cition.  Large  accumulations 
of  money  in  financial  centers,  instead  of  being  caused  by 
the  overflow  of  a  healthful  circulation,  or  even  being  proof  of 
a  sufficient  circulation,  are  unmistakable  e-sddence  of  a  congested 
condition,  caused  by  a  decreasing  and  insufficient  circulation. 
The  readiness  with  which  government  bonds  bearing  a  very  low 
rate  of  interest  are  taken,  instead  of  showing  that  the  credit  of 
the  government  has  improved,  is  melancholy  evidence  of  the 
prostrated  condition  to  which  i7idustry  and  trade  have  heen 
reduced. 

When  the  money  stock  is  diminishing  and  prices  are  fall- 
ing, the  lender  not  only  receives  interest  but  finds  a  profit  in 
the  greatly  increased  value  of  the  principal,  when  it  is  returned 
to  him.  A  loan  of  money  made  in  1809  if  repaid  in  1848 
would  have  been  repaid  with  an  addition  of  145  per  cent. 
in  the  purchasing  power  of  principal  and  interest  besides 
all  the  interest  paid.  Those  who  have  loaned  money  to  this 
government  since  1861  have  already  received  nearly  or  quite 
as  much  in  tlic  increased  value  of  their  principal  as 
in  interest,  and  all  tlie  probabilities  are.  in  respect  to  the 
four  per  cent,  thirty  year  national  bonds,  if  they  are  redeemed 
in  gold,  that  more  profit  will  ])e  made  by  the  augumentation 
in  the  value  of  principal  tlian  through  interest.  Indeed, 
the  signs  of  tlie  times  are  that  the  bonds  of  a  country  possessing 
the  unbounded  resources  and  stable  institutions  of  the  United 
States,  payable  in  gold  at  the  end  of  thirty  years  without  any 
interest  whatever,  would,  tlirough  the  increase  of  the  value  of 
that  metal,  prove  a  most  profitable  investment. 

The  worst  effect,  however,  economically  considered,  of 
falling  prices,  is  not  upon  existing  property  nor  upon  delators. 


PRICE  AND  ITS  DEPENDENCE  UPON  CUERENCY.  43 

evil  as  it  is,  but  upon  laborers  whom  it  deprives  of  employment 
and  consigns  to  poverty,  and  uj^on  society,  wliich  it  deprives  of 
that  vast  sum  of  wealth  which  resides  potentially  in  the  vigor- 
ous arms  of  the  idle  workman.  A  shrinking  volume  of  money 
transfers  existing  property  unjustly,  and  causes  a  concentration 
and  diminution  of  wealth.  It  also  impairs  the  value  of  existing 
property  by  eliminating  from  it  that  important  element  of 
value  conferred  upon  it  by  the  skill,  energy  and  care  of  tlie 
debtors  from  whom  it  is  wrested.  But  it  does  not  destroy  any 
existing  property,  while  it  does  absolutely  annihilate  all  the 
values  producible  by  the  labor  which  it  condemns  to  idleness. 
The  estimate  is  not  an  extravagant  one  that  there  are  now  in 
the  United  States  four  million  persons  willing  to  work,  but 
who  are  idle  because  they  cannot  obtain  employment.  This 
vast  poverty-stricken  army  is  increasing  and  will  continue  to 
increase  as  long  as  falling  prices  shall  continue  to  separate 
money-capital,  the  fund  out  of  wliich  wages  are  paid,  from 
labor,  and  to  discourage  its  investment  in  other  forms  of 
property. 

Money  capital,  labor,  and  other  forms  of  caj)ital  are  the 
warp  and  v/oof  of  the  economical  system.  Labor,  co-operating 
with  the  forces  of  nature,  is  the  source  of  all  wealth,  and 
to  reach  the  highest  degree  of  effectiveness  it  must  be  classified 
through  the  aid  of  capital  and  supported  by  capital  during  the 
process  of,  production  and  be  measured  and  paid  in  money, 
each  unit  of  which  is  a  sight-draft  on  all  other  forms  of  prop- 
erty, bearing  a  value  in  proportion  to  the  number  of  such 
drafts.  In  order  that  any  country  may  reach  the  maximum  of 
material  prosperity,  certain  conditions  are  indispensable.  All 
its  labor,  assisted  by  the  most  approved  machinery  and  appli- 
ances, must  be  employed,  and  the  fruits  ot  industry  must 
be  justly  distributed.  These  conditions  are  only  possible  when 
capital  is  absolutely  protected  against  \aolence  and  free  from 
illegitimate  and  legislative  interference,  and  when  the  laborer 


44  PHILOSOPHY    OF    PEICE. 

is  protected  in  his  natural  right  to  dispose  of  his  labor  in  such 
manner  as  he  may  prefer.  They  are  utterly  impossible  when 
the  money-stock  is  shrinking  and  the  money-value  of  property 
and  services  is  dechning.  Howsoever  great  the  natural  resources 
of  a  country  may  be,  however  genial  its  climate,  fertile  its  soil, 
ingenious,  enterprising  and  industrious  its  inhabitants,  or  free 
its  institutions,  if  the  volume  of  money  is  shrinking  and  prices 
are  falling  its  inhabitants  will  be  overwhelmed  with  bankruptcy, 
its  industries  will  be  paralyzed,  and  destitution  and  distress  will 
prevail. 

The  instinct  of  self-interest  is  the  mainspring  of  industrial 
and  commercial  activity.  It  is  the  animating  motive  alike 
of  the  capitalist  and  of  the  laborer.  Without  it  no  labor  would 
be  performed,  nor  would  capital  have  an  existence.  If  money- 
capital  is  withdrawn  from  productive  enterprises,  it  is  from  the 
apprehension  of  loss,  and  from  the  same  instinct  of  thrift 
through  which  it  was  acquii'ed.  It  is  natural  that  the  money- 
capitalist  should  exact  from  labor  all  he  can,  in  exchange 
for  his  money,  and  that  the  laborer  should  exact  all  the  money 
he  can  in  exchange  for  his  labor. 

What  is  known  as  the  conflict  between  capital  and  labor 
is  not  so  much  a  conflict  between  other  forms  of  capital  and 
labor  as  it  is  between  money  and  labor.  Indeed,  the  conflict 
between  money  and  other  forms  of  capital  is  as  distinctly 
marked  and  quite  as  severe  as  the  conflict  between  money  and 
labor,  and  in  tliat  conflict  other  forms  of  capital  suffer  fully  as 
much  as  labor,  the  only  difference  being  that  they  are  better  able 
to  endure  losses.  Other  forms  of  capital  must  be  constantly  con- 
verted into  money  in  order  to  pay  wages  and  to  meet  other 
demands  incident  to  industrial  enterprises.  When  the  stock  of 
money  is  shrinking  and  prices  are  falling,  this  conversion  can 
only  be  made  at  rates  continually  growing  more  unfavorable, 
while  at  the  same  time  the  products  of  the  laborer  for  whose 
wages  sacrifices  have  been  made  are  also  undergoing  a  shrink- 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  45 

ing  of  money- value.  Thus  loss  and  sacrifice  are  encountered  at 
every  turn,  and  the  o-^Tiers  of  other  capital  than  money  shrink 
from  the  friction  of  exchange,  withdraw  from  productive 
enterprises,  and  only  exchange  as  much  of  their  property 
for  money  as  will  suffice  to  meet  the  necessary  expenditures  of 
living,  which  are  reduced  to  the  most  economical  level,  as  it  is 
principal  and  not  income  that  is  being  consumed.  Little  more 
labor  will  be  employed  under  these  circumstances  than  is 
sufficient  to  support  the  owners  of  capital  on  this  parsimonious 
basis,  and  as  a  consequence  the  labor  market  will  be  ovei'stocked, 
and  the  competition  between  laborers  will  reduce  wages  to 
a  starvation  level.  But  during  this  period,  when  property  is 
being  sacrificed  to  meet  current  necessities,  and  laborers  are 
being  remitted  to  idleness  and  destitution,  money  fattens  on 
the  general  disaster.  Under  any  money  system  whatever, 
labor,  money  and  other  forms  of  capital  confront  each  other  as 
opposing  forces,  each  seeking,  through  a  natural  instinct,  to 
secure  as  much  as  possible  of  the  others  in  exchange.  These 
forces,  although  always  operating  against,  are  not  necessarily 
inimical  to  or  destructive  of  each  other.  On  the  contrary, 
under  a  just  money  system,  they  are  not  even  harmful  to  each 
other.  The  conflict  between  them  is  essential  to  the  proper 
adjustment  and  harmonious  working  of  all  parts  of  the  eco- 
nomical machinery.  They  are  the  centripetal  and  centrifugal 
forces  of  the  industrial  system. 

The  equilibrium  of  all  things  is  maintained  through 
counter-balances.  It  is  out  of  the  action  and  counteraction  of 
antagonistic  forces  that  the  harmonies  of  the  universe  are 
evolved.  But  under  an  unjust  money-system  which  through 
law  or  accident  fails  to  regulate  the  quantity  of  money  so  as  to 
preserve  the  equilibrium  between  money  and  the  other  factors 
of  production,  the  conflict  between  money  and  labor  and  other 
forms  of  capital  becomes  destructive  and  ruinous.  It  is  in  the 
shadow  of  a  shrinking  volume  of  money  that  disorders,  social 


46  PHILOSOPHY     OF     PRICE. 

and  "political,  gender  and  fester,  that  communism  organizes, 
that  riots  threaten  and  destroy,  that  labor  starves,  that  capital- 
ists conspire  and  workmen  combine,  and  that  the  revenues 
of  governments  are  dissipated  in  the  employment  of  laborers, 
or  in  the  maintenance  of  increased  standing  armies  to  overawe 
them. 

The  peaceful  conflict  which  under  a  just  money  system  is 
continually  waged  between  money-capital  and  labor,  and  which 
tends  only  to  secure  the  rights  of  each,  and  is  essential  to 
the  progress  of  society,  is  changed  under  a  shrinking  volume  of 
money  to  an  unrelenting  war,  threatening  the  destniction  of 
both.  Money,  in  either  shrinking  or  imduly  increasing  volmne, 
like  a  dissolving  chemical,  separates  capital  from  labor.  It  is 
not  against  capital,  but  against  the  false  financial  system  that 
permits  the  volume  of  money  to  either  shrink  or  unduly 
increase,  that  the  hostility  of  society  should  be  aroused.  Let 
labor  and  capital  be  put  on  equal  terms,  so  that  idle  capital  will 
be  as  unfruitful  as  idle  labor,  and  the  conflict  between 
them  will  cease  to  be  destructive. 

An  unjust  money-system  produces  an  unnatural  relation 
between  labor,  capital  and  money,  and  the  resulting  evils  can- 
not be  remedied  by  special  legislation  on  particular  cases, 
nor  by  general  legislation  abridging  the  natural  rights  of  either. 
Such  legislation  would  be  futile  and  impertinent,  destructive 
of  that  freedom  of  individual  action  so  essential  to  progress, 
and  subversive  of  the  true  interests  of  all  classes  of  society,  and 
would  powerfully  tend  to  the  overthrow  of  free  institutions. 

The  equitable  adjustment  of  the  correlative  demands  of 
capital  and  labor  cannot  be  made  through  violence,  and  is 
utterly  impossible  through  any  legal,  or  other  contrivance, 
under  any  system  that  permits  contraction  or  undue  expansion 
of  that  great  instrument  which  measures  ahke  the  property  of 
the  capitalist  and  the  labor  of  the  workman.  It  is  only  througli 
the  action  and  counteraction  of  the  antagonistic  forces  of  capital 


PRICE  AND  ITS  DEPENDENCE  UPON  CTEEENXY.  47 

and  labor,  automaricaliy  operating  under  a  just  money-svstem. 
that  eqnity  and  liarmony  can  be  evolved. 

The  very  same  reasons  wliicli  make  capitalists  refuse 
to  exchange  money,  whose  command  over  property  is  increas- 
ing, for  property  whose  command  over  money  is  decreasinor. 
also  makes  them  refuse  to  exchange  it  for  labor  for  the 
production  of  property.  In  a  commercial  sense  industrial 
enterprises  are  never  undertaken  nor  carried  on,  except  with 
the  hope  and  expectation  of  gain.  This  expectation,  unless 
tmder  exceptional  conditions,  falling  markets  destroy.  "WTiile 
capitahsts  for  these  reasons  cannot  afford  to  invest  monev 
in  productive  enterprises,  still  less  can  anybody  afford  to  borrow 
monev  for  such  investments  at  anv  rate  of  interest,  however 
low,  and  but  little  money  is  being  now  borrowed,  except 
for  purely  speculative  ventures,  or  to  supply  personal  and  fam- 
ily wants,  or  to  renew  old  obligations,  ^oney  withdrawn  from 
circulation  and  hoai'ded  in  consequence  of  falling  prices, 
although  neither  paying  wages  nor  serving  to  exchange  the 
fruits  of  industi'v.  nor  performing  any  of  the  tnie  fimctions  of 
money,  is  neveitheless  not  unproductive.  It  may  not  be  earn- 
ing interest,  but  it  is  enriching  its  owner  through  an  increase  of 
its  own  value,  and  that,  too,  without  risk,  and  at  the  expense  of 
society.  If  this  were  not  the  case,  and  if  money  were,  while  idle, 
losing  a  little  in  value  instead  of  gaining,  or  if  it  simply  held 
its  own.  it  would  be  constantly  dimi^shed  to  the  extent  of  the 
necessaiw  expenditures  of  its  owners  who,  under  such  conditions, 
would  be  impelled  by  every  instinct  of  thrift  to  seek  for  rev- 
enues through  its  employment  in  productive  enterprises.  The 
peculiar  effect  of  a  contraction  in  the  volume  of  money  is 
to  give  profit  to  the  owners  of  imemployed  money,  through  the 
appreciation  of  its  relative  purchasing  power — or  ratlier  its 
comparative  value  with  products — by  the  mere  lapse  of  time. 
It  is  falling  prices  that  robs  labor  of  emplovnient  and  precipi- 
tates a  conflict  between  it  and  mone\--capital,  and  it  is   the 


t8  PHILOSOPHY  OF   PEICE. 

appreciating  effect  which  a  shrinkage  in  the  vohime  of  money 
has  on  the  value  of  money  that  rendei's  the  contest  an  unequal 
one,  and  gives  to  money-capital  the  decisive  advantage  over 
other  forms  of  capital  invested  in  industrial  enterprises.  Idle 
machinery  and  industrial  appliances  of  all  kinds,  instead  of 
being  productive  of  profit,  are  a  source  of  loss.  They  con- 
stantly deteriorate  through  rust  and  waste.  They  cannot 
escape  the  assessor  and  tax-gatherer,  as  the  bulk  of  money  does, 
and  must  pay  extra  insurance  when  idle. 

Labor,  uuhke  money,  cannot  be  hoarded.  The  day's  labor 
unperformed  is  so  much  capital  lost  forever  to  the  laborer,  and 
to  society.  It  being  his  only  capital,  his  only  means  of  exist- 
ence, the  laborer  cannot  wait  on  better  times  for  better  wages. 
Absolute  necessity  forces  him  to  dispose  of  it  on  any  terms 
which  the  owners  of  money  dictate. 

These  are  the  conditions  which  sui  round  the  laborer 
throughout  the  commercial  world  to-day.  The  labor  of 
the  past  is  enslaving  the  labor  of  the  present.  At  least 
that  portion  of  the. labor  of  the  past  which  has  been  crys- 
tallized into  money  is  enabled  through  a  shrinkage  of  its 
volume  and  while  lying  idle  in  the  hands  of  its  owners  to  in- 
crease its  command  over  present  labor  and  over  all  forms  of 
property  and  to  transform  vast  numbers  of  honest  and  industri- 
ous workmen  into  tramps  and  beggars.  These  laborers  must 
make  their  wants  conform  to  their  diminished  earnings.  They 
must  content  themselves  with  such  things  as  are  absolutely  es- 
sential to  their  existence.  Consumption  is  therefore  constantly 
slirinking  toward  such  limits  as  urgent  necessity  requires.  Pro- 
duction, which  must  be  confined  to  the  limits  indicated  by 
consumption,  i.s  constantly  tending  towards  its  minimum, 
whereas  its  appliances,  built  up  under  more  favorable  condi- 
tions, are  sufficient  to  supply  the  maximum  of  consump- 
tion. Tlius  idle  labor,  idle  money,  idle  machinery,  and  idle 
capital    stand  facing   each  other,  and  the  stagnation  spreads 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  49 

wider  and  wider.  The  future  affords  no  hope  or  pros- 
pect of  improvement,  except  through  a  change  in  financial 
policies. 

Prices  have  been  persistently  falling  throughout  the  world 
since  1873,  and  as  fast  and  as  far  in  specie-paying  countries  as 
elsewhere.  If  the  policy  of  chaining  the  industry  and  com- 
merce of  the  world  to  a  single  metal  be  persisted  in  by  the 
United  States,  Germany,  and  other  European  countries  acting 
in  concert  with  them,  money  must  still  rise  in  value,  and  prices 
must  continue  to  fall.  The  depression  in  productive  industry 
will  become  more  deathlv,  and  the  number  of  idle  laborers  will 
indefinitely  multiply. 

The  loss  which  this  country  sustains  by  reason  of  the  en- 
forced idleness  of  four  millions  of  persons  who,  although  idle, 
must  still  m  some  scanty  way  be  supplied  with  food,  clotliing. 
and  shelter,  is  in  the  aggregate  very  great.  If  it  be  estimated 
at  one  dollar  per  day  for  each  laborer  it  would  amount  in  two 
years  to  a  sum  sufiicient  to  discharge  the  national  debt.  It 
would  pay  the  interest,  at  five  per  cent  per  .annum,  on  $1,800,- 
000,000.  It  Avould  be  a  sum  more  than  suflicent  to  supply 
anew  each  year  the  circulating  medium  of  the  country.  It 
would  amount,  in  four  years,  to  a  greater  sum  than  the  world's 
entire  gold  product  has  amounted  to  in  the  last  fifty  prolific 
years.  It  would  aggregate  in  ten  years  a  value  far  greater  than 
the  value  of  the  world's  entire  product  of  both  gold  and  silver 
for  the  last  hundred  years.  It  would  amount  in  four  years  to 
a  sum  more  than  sufficient  to  duplicate  and  stock  every  mile  of 
railroad  noM'  in  the  United  States. 

Contrasted  with  the  startling  sum  thus  annually  lost 
through  the  shrinkage  of  money  and  falling  prices,  the  amount 
which  could,  by  any  possibility  be  lost  in  a  generation  through 
fluctuations  in  the  relative  values  of  gold,  silver,  and  paper, 
would  Aveigh  as  mere  dust  in  the  balance.  If  to  this  loss  be 
added  that  caused  by  the  non-employment  of  productive  ma- 


50  PHILOSOPHY     OF     PRICE. 

cliinery  and  appliances,  the  aggregate  becomes  appalling. 
The  average  stocks  of  nearly  all  commodities  are  at  no 
time  sufficient  for  more  than  a  few  months'  consumption. 
AVithout  constant  reproduction  mankind  would  soon  be  strip- 
ped of  all  their  movable  possessions,  l^o  more  fatal  blow,  there- 
fore, could  be  directed  against  the  economical  machinery  of 
civilized  life  than  one  against  labor ;  and  that  blow  can  be  most 
effectively  delivered  through  a  policy  which  strikes  down  prices. 
If  all  debts  in  this  country  had  been  doubled  by  an  act  of  leg- 
islation, it  Avould  have  been  a  far  less  calamity  to  the  debtor 
and  to  the  country  than  the  increase  in  the  real  burden  already 
caused  by  a  contraction  in  the  volume  of  money.  And 
inlinitely  more  disastrous  in  every  sense  than  an  unjust  increase 
in  the  burden  of  debt  is  the  universal  stagnation  of  industry 
and  commerce  resulting  from  the  same  cause.  Tlie  doubling 
of  debts  would  have  left  the  productive  forces  unimpaired, 
while  falling  prices  are  sapping  them  insidiously  and  fatally. 
Kations  have  often  exhibited  an  astonishing  capacity  for  sus- 
taining and  repairing  the  destruction  of  great  and  protracted 
wars.  The  explanation  of  tliis  will  be  found  in  the  fact  that 
their  productive  forces  have  at  such  times  continued  vigorous 
and  active.  Armies  in  barracks  and  on  parade  are  as  essen- 
tially non-producers  as  when  actively  engaged,  and  a  consid- 
erable proportion  of  the  additions  made  to  armies  in  times  of 
war  are  recniited  from  the  ranks  of  non-producers.  England 
was  never  more  prosperous  than  during  the  I^apoleonic  wars. 
The  Northern  and  "Western  states  of  the  Union  were  never 
more  prosperous  than  during  the  civil  war,  and  for  some  time 
afterward.  So  long  as  all  the  productive  forces  are  active 
almost  any  burden  can  be  bonie.  The  debts  of  the  country, 
great  as  they  are,  would  scarcely  weigh  as  a  feather  if  all  its 
labor  were  employed.  Indeed,  this  country  could  better  afford, 
in  an  economical  view,  to  support  one  million  soldiers  in  the 
Held,  tlian  to  support  its  present  army  of  four  millions  that 


PRICE  AND  ITS  DEPENDENCEUPOX  CURRENCY.  51 

falling  prices  have  conscripted  into  the  ranks  of  non-producers. 

At  this  point  I  purpose  to  let  authority  emphasize  what 

is  taught  by  experience,  and  make  liberal  quotations  from  the 

soundest   thinkers  upon  this  subject,  from  authors,   writers, 

statesmen,  and  scholars,  to  the  end  that  their  testimony  may 

substantiate  the  position  taken  in  this  chapter.     I  have  no 

apology  to  offer  for  their  number  or  length  except  an  earnest 

desire  to  make  clear  the  proposition,  that  price  depends  upon 

the  volume  of  currency.      The  earliest  in  point  of   time  is 

the  following,  from  David  Hume's  Essay  on  money : 

"It  is  certain  that  since  the  discovery  of  the  mines  in 
America  industry  has  increased  in  all  the  nations  of  Europe. 
*  *  We  find  that  in  everv  kino-dom  into  which  money  be- 
gins  to  flow  in  greater  abundance  than  formerly,  everthing 
takes  a  new  face  ;  labor  and  industry  gain  life  ;  the  merchant 
becomes  more  enterprising,  the  manufacturer  more  diligent 
and  skillful,  and  even  the  farmer  follows  his  plow  with  greater 
alacrity  and  attention.  *  *  *  It  is  of  no  manner  of  conse- 
quence  with  regard  to  the  domestic  happiness  of  a  state  whether 
money  be  in  a  greater  or  less  quantity.  The  good  policy  of 
the  magistrate  consists  only  in  keeping  it,  if  possible,  still  increas- 
ing ;  because  ])y  that  means  he  keeps  alive  a  spirit  of  industry  in 
the  nation  and  increases  the  stock  of  labor,  in  which  consists  all 
real  power  and  riches.  A  nation  whose  money  decreases  is 
actually  at  that  time  weaker  and  more  miserable  than  another 
nation  which  possesses  no  more  money,  but  is  on  the  increasing 
hand." 

William  H.  Crawford,  Secretary  of  the  Treasury,  in  a  re- 
port (^February  12,  1820)  to  Congress,  says : 

"All  intelligent  writers  on  currency  agree  that  when  it  is 
decreasing  in  amount,  poverty  and  misery  must  prevail." 

Mr.  E.  M.  T.  Hunter,  in  a  report  (1852)  to  the  United 

States  Senate,  says : 

"Of  all  the  great  effects  produced  upon  human  society  by 
the  discovery  of  America,  there  were  j^robably  none  so  marked 
as  those  brought  about  by  the  great  influx  of  tlie  precious  metals 
from  the  New  World  to  the  Old.  European  industry  had 
been  declining  under  tlie  decreasing  stock  of  the  precious 
metals,  and  an  appreciating  standard  of  values;  liuman  inge- 


52  PHILOSOPHY  OF  PRICE. 

nuity  grew  dull  under  the  paralyzing  influences  of  declining 
profits,  and  capital  absorbed  nearly  all  that  should  have  been 
divided  between  it  and  labor.  But  an  increase  in  the  precious 
metals,  in  such  quantity  as  to  check  this  tendency,  operated  as  a 
new  motive-power  to  the  machinery  of  commerce.  Produc- 
tion was  stimulated  by  finding  the  advantages  of  a  change  in 
the  standard  on  its  side.  Instead  of  being  repressed  by  having 
to  pay  more  than  it  had  stipulated  for  the  use  of  capital,  it  was 
stimulated  by  paying  less.  Capital,  too,  was  benefited,  for  new 
demands  were  created  for  it  by  the  new  uses  which  a  general 
movement  in  industrial  pursuits  had  developed  ;  so  that  if  it  lost  a 
little  by  a  change  in  the  standard,  it  gained  much  more  in  the 
greater  demand  for  its  use,  which  added  to  its  capacity  for  re- 
production, and  to  its  real  value." 

The    Encyclopedia    Britannica,    1859,    (article    Precious 

Metals,  by  J.  R.  McCulloch,)  says: 

"A  fall  in  the  value  of  the  precious  metals,  caused  by  the 
greater  facility  of  their  production,  or  by  the  discoveiy  of  new 
sources  of  supply,  depends  in  no  degree  on  the  theories  of 
philosophers,  or  the  decisions  of  statesmen  or  legislators,  but 
is  the  result  of  circumstances  beyond  human  control ;  and  al- 
though, like  a  fall  of  rain  after  a  long  course  of  dry  weather, 
it  may  be  prejudicial  to  certain  classes,  it  is  beneficial  to  an  in- 
comparably greater  number,  including  all  who  are  engaged  in 
industrial  pursuits,  and  is,  speaking  generally,  of  great  public 
or  national  advantage." 

Ernest  Seyd,  1868,  (Bullion,  page  613,)  says: 

"Upon  this  one  point  all  authorities  on  the  subject  are 
agreed,  to-wit,  that  the  large  increase  in  the  supply  of  gold  has 
given  a  universal  impetus  to  trade,  commerce,  and  industry, 
and  to  general  social  development  and  progress." 

The  American  Review  (1876)  says : 

"Diminishing  money  and  falling  prices  are  not  only  op- 
pressive upon  debtors,  of  whom,  in  modern  times,  states  are  the 
gueatest,  but  they  cause  stagnation  in  business,  reduced  produc- 
tion, and  enforced  idleness.  Falling  markets  annihilate  profits, 
and  as  it  is  only  the  expectation  of  gain  which  stiumlates  the 
investment  of  capital  in  operations,  inadequate  employment  is 
found  for  labor,  and  those  who  are  employed  can  only  be  so 
upon  the  condition  of  diminished  wages.  An  increasing 
amount  of  money,  and  consequently  augmenting  prices,  are  at- 
tended by  results  precisely  the  contrary.     Production  is  stimu- 


PRICE  A^^D  ITS  DEPENDENCE  UPON  CURRENCY.        53 

lated  by  the  profits  resulting  from  advancing  prices;  laljor  is 
consequently  in  demand  and  better  paid,  and  tlie  general  ac- 
tivity and  buoyancy  insure  to  capital  a  wider  demand  and 
higher  remuneration."  ^ 

Leon  Fauchet,  (1843,)  in  Eesearches  upon  Gold  and  Sil- 
ver, says : 

"If  all  the  nations  of  Europe  adopted  the  system  of  Great 
Britain,  the  price  of  gold  would  be  raised  beyond  measure,  and 
we  should  see  produced  in  Europe  a  result  lamentable  enough." 

Before  a  French  monetary  convention  in  1869  testimony 
was  given  by  the  late  M.  "Wolowski,  by  Baron  Eothschild,  and 
by  M.  Rouland,  governor  of  the  Bank  of  France. 

M.  Wolowski  said : 

"The  sum  total  of  the  precious  metals  is  reckoned  at  fifty 
milliards,  one-half  gold  and  one-half  silver.  If,  by  a  stroke  o"f 
the  pen,  they  suppress  one  of  these  metals  in  the  monetary 
service,  they  double  the  demand  for  the  other  metal,  to  the  ruin 
of  all  debtors." 

Baron  Rothscliild  said : 

"The  siumltaneous  employment  of  the  two  precious  metals 
is  satisfactory  and  gives  rise  to  no  complaint.  Whether  gold 
or  silver  dominates  for  the  time  being,  it  is  til  ways  true  that 
the  two  metals  concur  together  in  fonning  the  monetary  circu- 
lation of  the  world,  and  it  is  the  general  mass  of  the  two 
metals  combined  which  serves  as  the  measure  of  the  value  of 
things.  The  suppression  of  silver  would  amount  to  a  veritable 
destruction  of  values  without  any  compensation." 

At  the  session  (October  30, 1873)  of  the  Belgian  Monetary 

Commission,  Professor  Laveleye  said : 

"Debtors,  and  among  them  the  state,  have  the  right  to  pay 
in  gold  or  silver,  and  this  right  cannot  be  taken  away  without 
disturbing  the  relation  of  debtors  and  creditors,  to  the  preju- 
dice of  debtors,  to  the  extent  of  jDcrhaps  one-half,  certainly 
of  one-third.  To  increase  all  debts  at  a  blow,  ihrusquement)^ 
is  a  measure  so  violent,  so  revolutionary,  that  I  cannot  believe 
tliat  the  government  will  propose  it,  or  that  the  Chambers  will 
vote  it." 

The  contrast  presented  by  these  authorities  between  the 

effects  of  an  increasing  and  decreasing  volume  of  money,  shows 


54  PHILOSOPHY  OF  PEICE. 

that  if  a  change  in  the  one  direction  or  the  other  is  miavoida- 
hle,  a  change  in  the  direction  of  an  increase  is  the  most  desira- 
ble. Because  the  enlargement  of  commercial  exchanges  which 
results  from  an  increase  of  money  speedily  restores  the  eqnilib- 
rium,  the  real  danger  of  an  undnly  increasing  money  is 
theoretical  and  fanciful.  The  trouble  which  practically  threat- 
ens the  world  and  which  has  been  the  most  prolific  cause  of 
all  the  social,  political,  and  industi-ial  ills  which  have  afflicted  it, 
is  that  of  a  decreasing  and  deficient  amount  of  money.  It  is 
from  such  a  deficiency  that  mankind  are  now  suffering,  and  is 
the  actual  and  present  evil  with  which  we  are  now  confronted. 

I  quote  further : 

Adam  Smith,  the  father  of  political  economy,  says,  jjage 
205: 

"From  the  high  or  low  money  price  either  of  goods  in  gen- 
eral, or  of  corn  in  particular,  we  can  infer  only  that  the  mines 
which  at  that  time  happened  to  supply  the  commercial  world 
with  gold  and  silver  were  fertile  or  barren.*' 

"Any  rise  in  the  money  price  of  goods  which  proceeded 
altogether  from  the  degradation  of  the  value  of  silver,  would 
affect  all  sorts  of  goods  equally,  and  raise  their  price  universally 
a  third,  or  a  fourth,  or  a  fifth  part  higher,  according  as  silver 
happened  to  lose  a  tliird,  or  a  fourth,  or  a  fifth  part  of  its  former 
vahie." 

John  Stuart  Mill,  in  Principles  of  Political  Economy,  says, 

page  301 : 

"The  proposition  which  we  have  laid  down  respecting  the 
dependence  of  general  prices  upon  the  quantity  of  money  in 
circulation,  must  be  understood  as  applying  only  to  a  state  of 
things  in  which  money,  tliat  is  gold  or  silver,  is  the  exclusive 
instrument  of  exchange,  and  actually  passes  from  liand  to  hand 
at  every  purchase,  credit  in  any  of  its  shapes  being  unknown. 
When  credit  comes  into  play  as  a  means  of  purchasing,  distinct 
from  money  in  hand,  we  shall  hereafter  find  that  tlie  connec- 
tion between  prices  and  the  amount  of  the  circulating  medium 
is  much  less  direct  and  intimate,  and  that  such  connection  as 
does  exist,  no  longer  admits  of  so  simple  a  mode  of  expression. 
But  on  a  siil)ject  so  full  of  complexity  as  that  of  currency  and 
prices,  it  is  necessary  to  lay  the  foundation  of  our  theory  in  a 


PRICE  AXD  ITS  DEPENDENCE  UPON  CURRENCY.  65 

tliorougli  iinderstaiiding  of  tlie  most  simple  cases,  which  we 
shall  ahvavs  lincl  lyiiiir  as  a  e'roiinchv'ork  or  substratum  under 
those  which  arise  in  practice.  Tliat  an  increase  of  the  quantity 
of  money  raises  prices,  and  a  diminution  lowers  them,  is  the 
most  elementary  proposition  in  the  theory  of  currency,  and 
without  it  we  should  have  no  key  to,  any  other." 

Affain  he  says : 

"If  the  whole  money  in  circulation  was  doubled,  prices 
would  double.  If  it  was  only  increased  o\\Q-io\XYt\ prices  would 
rise  one-fourth.  The  very  sojne  effect  would  be  produced  on 
prices  if  we  suppose  the  goods  (the  uses  for  money)  diminished 
instead  of  the  money  increased ;  and  the  contrary  eifect  if 
the  goods  were  increased  or  the  money  diminished.  So  that 
the  value  of  money — all  other  things  remaining  the  same — 
varies  inversely  as  its  quantity ;  every  increase  in  quantity 
lowering  its  value,  and  every  diminution  raising  it  in  a  ratio 
exactly  equivalent." 

Kicardo  plainly  says  in  regard  to  this  question  : 

"That  commodities  would  rise  and  fall  in  price  in  pro- 
portion to  the  increase  or  diminution  of  money,  I  assume  as  a 
fact  that  is  incontroverttble.  That  such  would  be  the  case,  the 
most  celebrated  writers  on  political  economy  are  agreed.  *  * 
The  value  of  money  does  not  inholly  depend  upon  its  absolute 
quantity,  Imt  on  its' quantity  relative  to  the  payments  it  has  to 
accomplish ;  and  the  same  effect  would  follow  either  of  two 
causes — from  increasing  the  nses  for  money  one-tenth,  or  from 
diminishing  its  quantity  one-tenth  ;  for,  in  either  case,  its  value 
would  rise  one-tenth." 

William  Stanley  Jeyons,  Professor  of  Political  Economy 

and  Logic  in  Owen  University,  England,  says : 

"I  cannot  but  agree  with  Mr.  Maeculoch,  that  putting  out 
of  sight  individual  cases  of  hardship,  if  such  exist,  a  fall  in  the 
value  of  gold  (increasing  the  quantity  of  money)  must  have, 
and,  as  I  should  say,  has  already,  a  most  powerful  beneficial 
effect.  It  loosens  the  country  from  the  old  bonds  of  del)t  and 
habit,  as  nothing  else  could.  '  It  throws  increased  rewards  le- 
fore  all  who  are  making  and  acquiring  wealthy  somewhat  at 
the  expense  of  those  who  are  enjoying  acquired  wealth.  It 
excites  the  active  and  skillful  classes  of  the  community  to  now 
exertions,  and  is,  to  some  extent,  like  a  discharge  of  his  del)ts 
is  to  the  bankrupt  and  insolvent  long  struggling  against  his 


56  PHILOSOPHY    OF    PRICE. 

burdens.     All  tliis  is  effected  without  the  break  of  national 
good  faitli  which  nothing  could  compensate." 

The  Professor  proves  b_y  methods  too  lengthy  to  quote 
here,  that  the  money  already  (in  1862)  issued  from  the  gold 
and  silver,  mines  of  California  and  Austi*alia  had  in  effect  re- 
duced the  burden  of  the  debt  of  England  40  per  cent,  by  in- 
creasing the  price  of  labor  and  all  forms  of  wealth. 

He  further  says  (Money  and  the  Mechanism  of  Exchange, 

page  338) : 

"Considerable  changes,  it  is  true,  are  taking  place  in  the 
mode  of  conducting  business  in  some  parts  of  the  Continent. 
Professor  Cliife  Leslie,  who  is  well  known  to  be  intimately  ac- 
quainted with  the  economical  systems  of  the  continental  coun- 
tries, attributes  the  rise  of  prices  in  Germany  in  a  great  degree 
to  the  quicker  circulation  of  the  money,  and  the  freer  use  of  in- 
struments of  credit.  In  the  Fodn  kjh  fly  Rev  lew  for  November, 
1870  (pages  568-9),  he  says:  'The  improvements  in  locomotion 
and  in  commercial  activity  which  have  so  largely  augmented 
the  money-making  power  of  the  Germans,  have  also  quickened 
prodigiously  the  circulation  of  money,  and  the  development 
of  credit,  likewise  following  industrial  progress,  has  added  to 
the  volume  of  the  circulating  medium  a  mass  of  substitutes  for 
money  w^hich  move  with  greater  velocity.  A  much  smaller 
amount  of  money  than  formerly  now  suffices  to  do  a  given 
amount  of  business,  or  to  raise  prices  to  a  given  range,  and  to 
the  increased  amount  of  actual  money  now  current  in  Germany 
we  must  add  a  brisk  circulation  of  instruments  of  credit. 
Were  the  circulating  medium  composed  of  coin  alone,  what- 
ever the  amount  of  the  precious  metals  issuing  from  the  mines, 
or  circulating  in  other  countries,  and  whatever  the  price  of 
German  commodities  in  markets  a])road,  no  rise  in  the  price  of 
German  commodities  could  take  place  without  additional  coin 
to  sustain  it.''' 

Page  335 : 

"To  decide  how  much  money  is  needed  by  a  nation,  we 
must,  firstly,  determine  the  quantity  of  work  which  money  has 
to  do.  This  will  be  proportional,  leterh  paribus,  to  the  num- 
ber of  the  iX)pulation.  Twice  the  number  of  people,  if  equally 
active  in  trade  and  performing  it  in  the  same  way,  will  clearly 
want  twice  as  mueli  money.  It  will  be  ])r()portional,  again,  to 
the  activity  of  industry,  and  to  the  complexity  of  its  organiza- 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY        57 

tion.  The  more  goods  are  bought  and  sold,  and  the  more  often 
they  pass  from  hand  to  hand,  the  more  currency  will  be  needed 
to  move  them.  It  will  be  proportional,  again,  to  the  price  of 
goods,  and  if  gold  falls  in  value  and  prices  are  raised,  more 
money  will  be  needed  to  pay  the  debts  increased  in  nominal 
amount." 

Prof.  Francis  Way  land,  in  his  work,  "Elements  of  Political 

Economy,"  which  is  taught  in  our  schools  and  colleges,  page 

296,  says : 

"The  opening  of  new  and  richer  mines,  or  the  use  of 
improved  means  for  extracting  the  metals,  may  cheapen 
money.  The  value  of  money,  like  that  of  any  other  com- 
modity, is  also  affected  in  short  periods  by  fluctuations  of  sup- 
ply and  demand." 

Page  297: 

"If  there  is  more  money  in  a  country  than  is  needed 
for  its  exchanges,  the  price  of  goods  is  raised  and  it  is  sent 
abroad  for  new  purchases.  If  there  is  a  scarcity  of  money  in 
a  country,  the  price  of  goods  declines,  and  money  comes  in  from 
other  hands  to  be  exchana^ed  for  tliem." 

Page  298 : 

"So  if  one  million  of  dollars  serves  all  the  purposes  of 
exchange  in  a  city,  to  double  the  amount  of  money  will  bring 
no  benefit.  If  it  is  a  city  isolated  from  the  rest  of  the  world, 
such  an  increase  will  merely  double  prices,  that  is,  twice  as 
much  money  will  be  used  in  every  exchange." 

"If  money  is  abundant  because  business  is  stagnant  and 
exchanges  are  few,  it  is  a  sign  of  adversity  rather  than  of  pros- 
perity. If  a  scarcity  of  money  is  caused  by  an  increase  of 
products  and  great  activity  of  trade,  it  indicates  a  prosperous 
condition.  In  countries  containing  rich  mines  of  the  precious 
metals,  money,  or  the  material  for  money,  becomes  a  product  of 
regular  industry,  and  its  abundance  is  a  favorable  sign." 

Prof.   Francis   Bowen  in   his  woi'k,  "American  Political 

Economy,"  page  280,  says  : 

"The  power  of  money  thus  to  determine  its  own  amount 
arises  from  the  recriprocal  action  of  the  quantity  of  money  in 
active  circulation  and  the  price  of  commodities.  All  exchange, 
as  I  have  said,  is  a  barter  of  merchandise  for  money  ;  and  tlie 
quantity  of  money  which  an  article  of  merchandise  will  com- 
mand in  the  market  is  termed  its  price.   Increase  that  quantity, 


58  PHILOSOPHY     OF     PFJCE. 

and  the  price  of  all  articles  iiieTitablv  rises '.  diminish  it,  and 
the  price  as  certainly  falls.  The  whole  process  of  exchange 
may  be  com^jared  to  the  operation  of  weighing  a  well-poised 
balance  ;  the  money  and  the  merchandise  being  placed  on  the 
opposite  arms  of  the  lever,  increase  the  weight  on  the  money 
side  and  the  merchandise  is  sure  to  rise.  We  can  easily  see, 
therefore,  why  the  amount  of  currency  for  the  whole  world 
distributes  itself,  by  its  own  laws,  among  all  nations,  in  exact 
proportion  to  their  respective  wants.  If  by  any  means  one 
nation  should  obtain  a  larger  portion  than  belongs  to  it  by  the 
regular  course  of  trade,  all  articles  of  merchandise  belonging 
to  that  nation  must  rise  in  price  ;  they  must  be  exchanged  for 
a  larger  quantity  of  money.  Articles  of  foreign  growth  and 
manufacture  would  be  irresistibly  attracted  thither  by  this 
alteration  of  values.  A  single  article  might  possibly  be  ex- 
eluded  by  prohibitory  legislation.  But  no  arbitrary  enactments 
can  so  clip  the  wings  of  commerceas  to  prevent  it  from  seeking 
a  market  in  a  country  where  the  price  of  all  commodities  lias 
risen  alcove  their  average  value  all  the  world  over.  Foreign 
goods  must  necessarily  be  imported  in  such  a  case,  whether  by 
open  trading  or  by  smuggling;  and,  being  imported,  they 
must  be  paid  for.  Money  is  the  only  redundant  article  in 
such  a  connnunity,  the  only  one  which  can  be  offered  in  }>ay- 
ment,  for  all  other  goods  are,  by  the  hypothesis,  of  a  higher 
price  with  them  than  in  any  other  country,  and  cannot  be  sent 
abroad  but  at  a  sacrifice.  J\Ioney  then  Avould  be  exported  in 
spite  of  all  coast  guards,  and  the  currency  would  thus  be 
reduced  to  its  natural  level."' 

Page  281 : 

"In  the  other  case,  if  the  currency  of  any  nation  should 
fall  below  tlie  average  proportion  to  its  wants,  the  price  of 
•all  merchandise  there  would  fall,  thev  beins:  exchanged  against 
a  smaller  amount  ot  money. 

"The  equalization  of  money  is  but  another  name  for 
the  equalization  of  prices." 

Prof.  Thompson,  Political  Economy,  while  not  exactly  in 
accord  with  this  theory  as  a  whole,  quotes  from  many  eminent 
authors  as  follows : 

Page  22 : 

"IVIr.  Eicardo  (following  Say  and  Torrens)  also  elaborated 
the  theory  of  international  exchanges,  in  connection  with  the 


PKICE  A>-D  ITS  DEPENDENCE  UPON  CURRENCY.        59 

notion  that  money  is  a  purely  passive  instrument  of  exclianges, 
changing  its  purchasing  power  according  to  the  amount  of  it 
that  a  country  possesses.  From  this  i"t  was  an  easy  infer- 
ence that  a  drain  of  money  from  a  country  would  either  have 
no  effect,  or  would  correct  itself  by  so  increasing  the  pur- 
chasing power  of  money  in  comparison  with  commodities,  as  to 
make  the  country  a  bad  place  to  sell  in,  but  a  good  place  to 
buy  in." 

Page  149 : 

"On  the  principles  generally  accepted  by  the  English 
school,  and  first  enunciated  by  David  Hume  in  1752,  the  rate  of 
decrease  in  value  should  have  been  exactly  proportional  to  the 
increase  in  amount.  He  says  that  'the  only  influence  which 
a  greater  abundance  of  coin  has  in  the  kingdom'  is  'by 
heightening  the  price  of  commodities  and  obliging  every  one 
to  pay  a  greater  number  of  these  little  yellow  or  white  pieces 
for  everything  he  purchases.'  He  admits  indeed  a  temporary 
eifect  of  quite  another  kind.  'In  eve^y  kingdom  into  which 
money  begins  to  flow  in  greater  abundance  than  formerly, 
everything  takes  a  new  face  ;  labor  and  industry  gain  life,  the 
merchant  becomes  more  enterprising,  the  manufacturer  more 
diligent  and  skillful,  and  the  farmer  follows  his  plow  with 
greater  alacrity  and  attention." 

Page  150,  quotes  J.  S.  Mill : 

"If  the  whole  money  in  circulation  was  doubled,  prices 
would  be  doubled  ;  if  it  was  only  increased  one-fourth,  ^jrices 
would  rise  one-fourth." 

Page  208,  quotes  Thomas  Tooke : 

"Hence  new  uses  will  be  found  for  it  when  it  is  abundant, 
new  avenues  of  commerce  will  be  opened,  new  branches  of 
industries  will  be  essayed,  until  increased  production  finds 
employment  for  the  increase  of  money.  If  money  lias  increiised, 
industry  and  trade  ai'e  increased ;  and  thus  the  tendency  to 
depreciation  is  met  and  strongly  counteracted." 

Page  208 : 

"The  drain  of  precious  metals  from  a  country,  though  its 
effects  are  alle^dated  by  the  creation  of  the  credit-fund  for 
domestic  payments,  is  therefore  decidedly  injurious  to  its  gen- 
eral interests.  It  is  not  exactly  true  to  say,  as'lias  too  often  been 
said  over  and  over  again,  since  Turgot  first  said  it.  that 
money  is  a  commodity  like  any  other.  That  proposition  is  untrue, 


60  PHILOSOPHY    OF    PEICE. 

except  as  it  regards  tlie  metal  of  which  money  is  made,  but  in  so 
far  as  it  is  the  means  of  exchange,  it  has  peculiarities  of  its  own, 
which  clearly  distinguish  it  from  other  commodities.  If  iron 
and  cotton  are  scarce,  those  who  need  them  suifer  by  tlie 
scarcity,  but  it  has  no  effect  upon  the  prices  of  other  materials. 
If,  on  the  other  hand,  money  is  scarce,  the  price  of  everything 
else  is  affected.  Every  one  must  make  exchanges,  must  buy  and 
sell ;  if,  therefore,  there  is  a  tendency  to  a  deficiency  or  a 
scai'city  of  the  means  of  exchange,  everyone  is  straitened,  and 
all  transactions  become  difficult.  Just  as  when  the  water  falls 
in  its  rivers,  traffic  is  interrupted  because  the  vessels  are 
aground,  so,  when  money  is  diminished  or  disappears  from  the 
channels  of  circulation,  articles  pass  from  one  owner  to  another 
with  great  difficulty.  We  have  got  to  the  jDoint  of  dispensing, 
in  the  commercial  transactions  of  advanced  countries,  with  a 
great  quantity  of  money  by  replacing  with  credit  in  all  its  forms ; 
but,  given  the  quantity  of  money  tliat  is  still  necessary,  its 
rarity  produces  an  embarrassment,  and  sometimes  even  a  general 
crisis." 

Professor  Perry  says : 

"The  fact  that  such  a  medium  is  in  universal  circulation, 
and  that  tlie  holders  are  ready  and  willing  to  exchange  it 
against  any  sort  of  service  adopted  to  gratify  their  desires,  ex- 
ercises a  kind  of  creative  power,  and  brings  a  thousand  i^roduc- 
tions  to  market  M'hich  would  otherimse  never  have  come  into 
existence.  Since  money  will  buy  anything,  men  are  on  the 
alert  to  bring  forward  something  which  will  buy  money ;  and 
since  money  is  divisible  into  small  pieces,  an  incredible  num- 
ber and  variety  of  small  services  are  brought  forward  to  be  ex- 
changed against  these  pieces,  which  service  we  have  no  reason 
to  suppose  would  ever  be  brought  forward  at  all,  were  it  not 
for  the  strong  attraction  of  money.  Money  is  a  form  of  capi- 
tal which  stimulates  and  facilitates  all  the  processes  of  pro- 
duction toithout  exception^'' 

Professor  Chevalier,  of  France,  than  whom  no  greater 

authority  on  money  has  ever  lived,  in  speaking  of  the  increase 

of  money,  says: 

"Such  a  change  will  benefit  those  who  live  by  current  la- 
bor and  enterprise  ;  it  will  injure  tliose  who  live  upon  the  fruits 
of  past  labor.  In  this  repsect  it  will  work  in  the  same  direction 
with  most  of  the  developments  which  are  brought  al)out  by 
that  great  law  of  cizilization  to  which  we  give  the  noble  name 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  61 

of  progress.  *  *  *  ,  ^^  ^^'-^^  ^^^6"  wisely  said  tliat  tliere  is  no 
inacliine  wliicli  econo?nhes  labor  like  money,  and  its  adoption 
ha-:  been  likened  to  the  discovery  of  letters.'' 

In  his  work  (1831)  on  the  so-called  precious  metals,  herein- 
before quoted  from,  Mr.  Jacob  says : 

"The  following  sheets  owe  their  composition  to  the  friend- 
ship with  which,  during  more  than  twenty-five  years,  I  had 
the  honor  of  the  late  Mr.  Huskisson  (Member  of  Parliament). 
*  *  *  I  had  made  some  progress  in  the  collection  of  facts 
from  the  sacred  and  profane  writers  of  antiquity,  when  the 
dreadful  accident  occurred  by  which  his  country  and  the  world 
were  deprived  of  the  services  of  that  eminent  and  estimable 
man.  ^  *  *  It  will  readily  be  believed  that  his  penetnit- 
ing  and  assiduous  habits  would  lead  him  to  accurate  vieM\s  of 
the  influence  of  the  precious  metals  on  the  industry  of  man- 
kind. He  saw  that  an  increase  in  the  production  of  the  mines 
might  act  as  a  stimulus  to  excite  industry,  invention,  and 
energy  (consider  the  march  of  civilization  since  the  issue  of 
money  by  the  mines  of  California  and  Australia,  and  the  issue  of 
paper  money  during  the  war  of  the  rebellion)  ;  while  a  decline 
in  their  produce  might  have  a  contrary  tendency.  He  looked 
with  attention  to  othei'  consequences  which  might  arise  from 
the  failure  or  defalcation  of  the  mines,  and  considered  the 
effect  of  gold  and  silver  (of  money)  on  the  production  of 
wealth  to  be  of  less  importance  than  the  influence  it  would  ex- 
ercise in  the  distribution  of  it,  in  the  complex  situation  of  the 
several  classes  of  which  modern  society  in  Europe  is  com- 
posed." 

Francis  A.  Walker,  of  Yale  College,  Professor  of  Political 

Economy  and  History,  says : 

''Perhaps  we  shall  get  a  better  view  of  this  subject  by 
confining  ourselves  to  the  claims  made  in  favor  of  a  p)rogress- 
ive  increase  of  the  money.  It  does  not  need  to  be  said  that 
Mr.  Hume  had  in  view  an  increase  of  money  not  so  great  as  to 
bewilder  the  producer  and  the  trader  through  a  fiei-cely  rai)id 
rise  in  prices,  or  to  render  sober  business  calculations  impos- 
sible. *  *  *  The  public  indebtedness  of  the  civihzed 
world  to-day  probably  stands  between  twenty-five  and  thirty 
thousand  millions  of  dollars  of  American  money.  The  volume 
of  private  debts,  including  the  capitalized  value  of  fixed 
charges — loans,  annuities,  etc., — is  vastly  greater. 

"JS^early  the  whole  of  this  vast  body  of  obligations  is  pay- 


62  PHILOSOPHY  OF   PRICE. 

able,  principal  and  interest,  in  money.  The  question  whetlier 
tlie  supply  of  money  shall  inereme  or  deer-ease  is,  then,  the 
question  whether  the  hurden  of  these  more  or  less  permanent 
charges  shall  be  diminished  or  enhanced.  It  is  the  fact  of  a 
large  body  of  indebtedness  (some  hundreds  oi  thousands  of 
milHons)  which  gives  its  chief  importance  to  the  current  pro- 
duction of»  the  pi  ecious  metals.  *  -sfr  *  That  gold  or  silver 
should  be  yielded  in  exactly  the  amount,  from  time  to  time, 
from  generation  to  generation,  which  will  serve  to  keep  the 
value  oivaowey  uniform,  is  not  to  be  expected.  We  are  not  to 
expect,  therefore,  that  the  value  of  money  will  remain  constant 
through  any  long  period.  One  of  the  two  parties  to  long  con- 
tracts (no  matter  how  short  they  are,  provided  they  are 
renewed  instead  of  being  paid,  and  public  debts,  as  well  as 
those  of  merchants,  generally  speaking,  grow,  larger  and  larger) 
M'ill,  in  all  probability,  lose,  while  the  other  will  gai^i  by  the 
chano'e  in  values.  The  losses  thus  sustained  hiay  be  slio-ht,  or 
they  may  be  serious  and  even  ruinous.  -  -^  ^  Certainly, 
I  think,  no  one  could  refuse  to  admit  that,  if  it  M'ere  an  issue 
between  liaving  tlie  pressure  of  the  whole  body  of  indebted- 
ness diminished  by  natural  causes,  or  increased,  the  former  re- 
sult would  be  prefera])le.  If  it  were  a  question  of  saeriilcing 
the  Present  to  the  Past,  or  the  Past  to  the  Present,  all  would 
agree  in  saying.  Let  the  deojd  hury  its  deadP 

"The  weight  of  opinion  among  economical  writers  of  rep- 
v.tation  seems  to  be  in  the  affirmative.  Mr.  J.  P.  McCulloch, 
the  Englisli  economist,  has  perliaps  taken  the  strongest  grounds 
in  favor  of  the  desirableness  of  a  gradual  reduction  in  tlie  bur- 
den of  debts,  through  the  natural  increase  in  the  volume  of  the 
precious  metals.  *  *  *  /jf  pi'oniotes  industry,  and  di- 
minishes tJie  weight  of  ohligations  which  jyress  upon  the  pro- 
ducing classes,  lohether  employer  or  employed^ 

Mr.   Horton,   after  advocating  the  gradual   increase   of 

money,  says: 

"I  know  the  danger  of  giving  the  support  of  science  to 
that  spirit.  On  the  other  hand,  I  luive  coiiiidence  in  truth 
and  in  the  lionesty  and  acuteness  of  my  countrymen ;  and  I 
think  the  nafe  course  for  the  advocates  of  sound  currency  is  to 
grasp  this  mettle  lirmly.  The  truth  will  bear  to  be  seen ;  the 
greatest  danger  is  in  misrepresenting  it." 

Pcgarding  the  observation  of  Professor  Ilorton,  Professor 

Walker  says : 


WHAT  IT  IS  AND  HOW  ESTABLISHED.  63 

"On  this  point  Mr.  Horton's  remark  seems  to  me  thor- 
oughly just  and  manly." 

Such  are  the  opinions  of  men  who  occupy  the  world's 
honored  seats  of  learning,  and  who  are  familiar  with  every 
page  of  the  history  of  mankind,  and  are  profoundly  acquainted 
witli  all  the  facts  and  principles  which  have  ]>een  established 
by  the  last  three  thousand  years  of  man's  experience. 

Prof.  A.  L.  Perry,  Political  Economy,  page  66,  says : 

''Price  is  indeed  only  a  case  under  the  class  values,  but 
practically  it  becomes  a  very  important  thing  in  Political 
Economy,  because  the  value  of  almost  all  exchangeable  things 
is  determined  through  price.  So  far  as  commodities,  personal 
services,  and  claims  are  exchanged  against  each  other  directly, 
without  the  intervention  of  money  or  the  use  of  the  denomi- 
nations of  money  price  plays  no  j)ai-t  though  value  dt:»es,  but 
these  cases  are  few  and  insigni^cant  as  compared  with  the 
whole.  It  is  hardly  necessary  to  add,  that  price,  though  rela- 
tive, is  specific  and  not  general,  and  consequently  that  there 
may  he  a  general  rise  or  fall  of  prices.  If  the  money  of  a 
country  becomes  relatively  more  abundant  than  before,  general 
prices  will  rise  in  that  country  for  reasons  already  made  appar- 
ent ;  and  when  money  becomes  less  abundant  prices  Avill  fall 
for  corresponding  reasons." 

Mason  and  Lailor,  Primer  of  Political  Economy,  page  50 : 

"One  thing  may  rise  in  value,  but  in  order  that  it  may  do 
so,  other  things  (Prop,  twenty-six)  nnist  fall.  If  money  rises 
in  value,  it  vriW  take  less  of  it  to  buy  other  commodities. 
Therefore,  general  prices  will  fall.  If  money  falls  in  value,  it 
will  take  more  of  it  to  buv  other  connnoditiea.  Therefore, 
general  prices  will  rise.  If  tea  has  been  selling  for  nmety  cts., 
cofiee  for  thirty,  and  sugtir  for  twenty-two  and  one-lialf,  a 
pound,  and  a  scanty  supply  (Prop,  six)  forces  tlieir  prices  up 
to  one  dollar,  eighty,  sixty,  and  forty-five  cents,  a  pound,  the 
value  of  money  so  far  as  they  are  concerned  will  lun'o  fallen. 
A  dollar  will  not  exchange  for  as  much  of  them  as  it  used  to. 
There  has  been  a  general  rise  of  their  prices,  but  there  lias  l^een 
neither  rise  nor  fall  in  their  values,  compared  with  each  other. 
For  a  pound  of  tea,  before  the  rise  in  price,  would  have  l)Ought 
three  pounds  of  coffee  or  four  of  sugar,  and  it  will  l)uy  pre- 
cisely the  same  amount  now.  Therefore,  there  may  l)e  a  gen- 
eral rise  or  fall  in  prices." 


64  PHILOSOPHY  OF   PRICE. 

Prof.  Syme,  Industrial  Science,  page  151 : 

''The  price  of  money,  or  tlie  rate  of  interest,  does  not 
depend  on  its  quantity,  as  even  Mill  acknowledges,  although 
somewhat  inconsistently,  as  I  consider,  for  why  should  not  the 
price  of  money  be  regulated  in  the  same  manner  as  the  price 
of  any  other  commodity  ?  Money  is  subject  to  the  same  fluctu- 
ations as  ordinary  commodities,  and  its  price  ought  to  l>e  regu- 
lated in  the  same  way,  namely,  by  demand ;  and  demand,  again,  is 
influenced,  as  in  the  case  of  ordinary  commodities,  by  proiits. 
If  profits  are  small,  the  demand  w^ill  be  small,  and  the  i-ate  of 
interest  wi.l  be  low ;  if  proflts  are  large  the  demand  will  be 
large,  and  tlie  rate  of  interest  will  he  higli.  Money  in  the 
United  States  is  more  plentiful  than  it  is  in  England  (as  proved 
by  the  higher  prices  of  commodities  and  wages  in  the  former 
than  in  the  latter  country\  and  it  is  more  plentiful  in.  Aus- 
tralia than  it  is  in  the  United  States." 

Linderman,  in  his  Money  and  Legal  Tender,  page  118 
says: 

"If  a  nation  may  not  depart  from  its  metallic  money 
standard,  except  as  a  last  resort  for  its  own  preservation,  it 
surely  should  not  undertake  to  return  too  rapidly  to  the  metallic 
standard,  especially  when  there  has  been  a  wide  departui-e 
from  it.  Years  of  frugality  on  the  part  of  the  people,  as  well 
as  a  wise  and  economical  administration  of  public  affairs,  are 
necessary  to  bring  a  country  from  a  depreciated  paper  money 
to  the  metallic  standard  previously  existing,  however  great 
may  be  its  natural  resources.  This  is  showm  in  the  United 
States,  wliere  a  credit-money  standard,  which  has  prevailed 
since  eighteen  hundred  and  sixty-two  (1862\  has  not  yet  been 
brought  to  a  parity  with  the  metallic  standard." 

Fawcett,  in  Handbook  of  Finance,  pages  146  to  148,  says : 

"The  decline  of  prices  since  1872-3  is  explained  by  the 
increased  value  of  gold.  Tlie  first  effect  was  to  cause  a  collapse 
in  'speculative  securities'  viz :  bonds  of  railroads,  etc.,  which 
were  based  on  the  expectations  of  a  continuance  of  high  prices 
for  commodities,  or  in  other  words,  a  low  value  for  gold.  The 
losses  which  followed  caused  panic  and  a  decrease  in  manufactur- 
ing industry  and  improvement  enterprises.  This  diminislied  em- 
ployment for  labor  and  necessarily  decreased  the  consumj^tive 
demand  for  all  commodities.  Theorists  have  been  jangling  for 
three  years  about  the  cause  of  the  reaction  whicJi  began  in 
3872-3,  and  the  decline  of  prices  which  has  continued  almost 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  65 

witliout  interruption  since.  Tliese  causes  are,  however,  not 
obscure.  The  progress  of  the  physical  sciences  and  of  labor- 
saving  inventions  has  undoul)ted]y  had  an  important  tendency 
to  reduce  the  prices  of  nearly  all  manufactured  articles  and,  to 
a  small  extent  also,  tlie  value  of  raw  materials.  But  the  in- 
creased burden  of  debt,  the  increase  of  traffic  (thus  requiring  a 
larger  volume  of  the  circulating  medium),  and  the  demonetiza- 
tion of  silver,  have  all  contributed  to  increase  the  value  of 
gold  beyond  its  equitable  value  as  a  measure  for  values  of  com- 
modities. The  era  of  golden  debt,  like  the  era  of  gold,  has 
had  its  culmination,  and  the  causes  at  work  are  noAV  preparing 
the  way  for  some  new  era  in  financial  affairs  which  will,  in  all 
probability,  l)e  as  miique  as  either  of  the  two  which  have  pre- 
ceded it.  No  man  can  yet  foresee  what  it  is  to  be.  It  is,  ho\V- 
ever,  not  difficult  to  distinguish  a  few  tendencies,  that  must 
operate  toward  the  new  development.  The  lirst  of  these  is  the 
decline  in  the  rates  of  interest  for  mc^ney  in  order  to  reduce  the 
burden  of  funded  and  mortgage  debt  everywhere.  This  will 
be  accomplished  partly  by  the  repudiation  and  complete  loss 
of  a  very  large  portion  of  the  existing  volume  of  funded  debts, 
and  partly  by  the  concentration  of  capital  (seeking  safety  ratlier 
than  high  rates  of  interest)  on  a  smaller  amount  of  the  debt. 
Another  tendency  that  must  continue,  is  the  necessity  for  sup- 
plementing the  stock  of  gold  in  the  world  with  the  stock  of 
silver,  and  a  universal  recognition  of  both  metals  as  money  at 
about  the  saine  relative  values  they  maintained  prior  to  the  era 
of  gold.  Tntil  these  things  are  accomplished,  ''prices"  will 
continue  to  decline,  and  the  commercial  world  will  he  in  dis- 
tress." 

Sir.  E.  Sulleran,  in  his  work.  Protection  to  Xative  Indus- 
try, page  7,  says : 

"Nearly  twenty  years  have  elapsed  since  the  discovery  of 
gold  in  California  and  Australia,  and  the  spread  of  steam  com- 
munication by  land  and  sea  over  the  wholei'ace  of  the  globe,  in- 
creased to  an  inconceivable  extent  the  trade  of  the  world,  and 
equalized  the  trading  conditions  of  the  different  nations  of 
the  globe  and  people  that  inhabit  it.  Every  nation,  every  in- 
dustry, received  an  influence  and  enormously  increased  its  com- 
mercial forces." 

A  modern  writer  says : 

"That  contraction  of  the  currency  (the  money  of  a  com- 
munity) must  contract  values  and  derange  industry,  is  a  prop- 


6G  PHILOSOPHY    OF    PRICE. 

osition  as  simple  and  as  true  as  that  two  added  to  two  will 
make  four;  that,  so  long,  therefore,  as  contraction  shall  con- 
tinue, shrinkage  must  progress  and  enterprise  halt,  because  no 
one  can  buy  anything  under  a  continuing  contraction  without 
cei'tain  loss  on  any  purchase.  "With  an  increase  of  money,  a 
material  rise  in  all  values  is  not  invariable.  It  may  be  that  the 
increase  will  give  rise  to  new  enterprises,  which  give  employ- 
ment to  the  idle,  so  that  legitimate  demand  for  money  may 
keep  pace  with  the  increase,  and  relatively  the  demand  and 
supply  may  continue  on  a  par." 

The  following  extract  from  Alison's  History  of  Europe 

shows  that  this  ruinous  policy  of  contraction  lias  .obtained  in 

other  countries  besides  our  own,  and  that  the  effect  was  then  as 

now  to  fill  the  coffers  of  the  rich  money-lenders  at  the  expense 

of  all  other  classes : 

"The  evils  complained  of  arose  from  the  unavoidable  re- 
sult of  a  stati<jiiary  currency,  co-existing  with  a  rapid  increase 
in  the  numbers  and  transactions  of  mankind,  and  these  were 
only  aggravated  by  every  addition  made  to  the  energies  and 
productive  powers  of  society.  *  *  *  gi^t  if  an  increiise  in 
the  numbers  and  industry  of  men  co-exists  with  a  diminution 
in  the  circulating  medium  by  which  their  transactions  are  car- 
ried on,  the  most  serious  evils  await  society,  and  the  whole  re- 
lations of  its  different  classes  to  each  other  will  be  speedily 
changed  ;  and  it  is  in  that  state  of  things  that  the  saying  proves 
true,  that  "the  rich  are  every  day  growing  richer  and  the  poor 
poorer." 

Henry  C.  Care}^,  one  of  our  soundest  thinkers,  says  in  his 

work.  Harmony  of  Interests,  page  186 : 

"The  introduction  of  a  third  commodity,  itself  liable  to 
variation  in  the  supply,  as  in  the  case  with  money,  tends  to 
produce  additional  variations  in  the  quantity  of  one  commodity 
that  must  be  given  for  another.  Thus,  if  the  supply  of  money 
be  large  among  one  set  of  wheat  raisers,  and  small  among  an- 
other, the  raiser  of  sugar  will  sell  in  the  first,  and  buy  m  the 
last,  obtaining  much  money  from  the  one  and  giving  little  to 
the  other.  Were  all  arrangements  for  the  production,  purchase, 
or  sale  of  commodities  or  property  executed  on  the  instant, 
tJiis  cause  of  disturbance  would  scarcely  exist,  because  the 
prices  of  all  would  be  similarly  affected,  being  higli  when 
money  was  plenty  and  low  when  it  was  scarce,  and  the  quan- 


PKICE  AND  ITS  DEPENDENCE  UPON  CUKKENCY.  67 

titj  of  sugar  to  be  given  for  wheat  or  wheat  for  sugar,  would 
depend  upon  the  size  of  tlie  crops  ahnost  as  completely  as  if  no 
intermediate  commodity  were  used.  Such,  however,  is  not  the 
case.  The  merchant  buys  coffee  in  January,  and  contracts  to 
deliver  its  equivalent  in  money  in  July,  at  which  time  money 
may  be  so  scarce  that  six  pounds  of  coffee  will  command  no  more 
than  would  have  been  done  in  January  by  four  pounds.  The 
merchant  commences  to  build  a  ship  in  July,  when  money  is 
scarce,  and  the  price  of  labor  is  low,  and  he  tinishes  it  when 
money  is  plenty  and  wages  are  high,  and  it  costs  him  ten,  fif- 
teen, or  twenty  per  cent,  more  than  he  had  calculated  upon. 
The  little  trader,  on  the  contrary,  who  buys  and  sell  from 
day  to  day,  loses  nothing.  If  he  buys  high,  he  sells 
high,  and  if  prices  are  low  to  buy,  he  makes  them  low 
to  sell,  and  the  measure  of  his  business  is  the  measure  of 
his  profits.  The  great  suffers  by  such  variations  are  those  the 
nature  of  whose  property,  or  the  character  of  whose  business, 
requires  them  to  make  arrangements  far  ahead,  and  to  take  the 
risks  incident  to  changes  in  the  currency  for  the  whole  period 
that  elapses  between  the  commencement  and  the  conclusion  of 
an  undertaking.  Sucli  are  all  the  persons  the  products  of 
whose  labor  are  not  intended  for  immediate  consumption, 
the  owners  of  houses,  farms,  factories,  furnaces,  railroads — all, 
in  fact,  connected  with  the  improvement  of  land.  In  a  time 
of  pressure  for  money  in  one  place,  flour,  cotton,  cloth,  and 
other  articles  intended  for  daily  consumption,  may  be  trans- 
ferred to  other  places  where  money  is  plenty,  and  the  changes 
in  their  prices  are  therefore  small  when  compared  with  those 
which  are  experienced  by  the  possessors  of  property  that  can- 
not be  transferred,  and  are  thei'efore  obliged  to  bear  the  whole 
burden  of  the  change.  In  such  cases  land  becomes  eutinily 
unsalable  except  at  an  enormous  reduction  of  price,  to  A\hich 
its  owners  must  submit  if  they  are  placed  in  a  position  to  ren- 
der sales  necessary ;  and  thus  it  is  that  so  many  persons  con- 
nected with  land  and  its  improvement  are  ruined  by  revulsions 
that  affect  but  in  a  small  degree  the  o})erations  of  the  retail 
grocer.  Such,  likewise,  is  the  case  with  labor.  The  man  who 
has  a  family  and  finds  no  demand  for  his  labor  cannot  change 
his  locality.  He  and  his  family  must  suffer  together.  Fo(h1 
may  be  at  a  low  money-price^  but  if  he  can  ol)tain  no  employment, 
the  labor-price  is  so  high  he  cannot  purchase  it.  Laud  and  la- 
bor, then,  are  especially  interested  in  the  maintenance  of  uni- 
formity in  the  standard  by  which  the  products  of  botli  are 


'68  PHILOSOPHY  OF   PEICE. 

measured,  because  tliey  are  tlie  great  sufferers  by  tlie  changes 
wliieli  occur  in  the  progress  of  time." 

W.  G.  Sumner,  American  Currency,  page  329 : 

"We  have  seen  that  prices  alone  govern  tlie  flow  of  the 
preeioue  metals,  or,  more  strictly  stated,  that  the  movement  of 
the  metals  and  the  prices  of  commodities  in  difterent  countries 
act  and  react  upon  one  another  in  such  a  way  as  to  keep  up  the 
exact  natural  relation  of  prices  1)etween  different  countries,  and 
give  to  each  country  in  the  v.'orld's  market  its  full  relative  ad- 
vantage in  production.  If,  therefore,  a  nation  has  a  specie  cur- 
rency, a  drain  upon  it  l)y  an  adverse  balance  of  trade,  a  foreign 
payment,  or  any  other  similar  cause,  would  immediately  pro- 
duce a  lowering  of  prices  and  a  return  of  current  specie  until 
the  natural  level  was  once  more  restored." 

Nothing  more  certain  than  this.  Henry  Clay,  during  the 
debates  on  the  sub-treasury  in  1840,  made  the  following  elo- 
quent, truthful  and  logical  speech.  It  shows  clearly  that  his 
great  mind  had  grasped  the  idea,  that  price,  not  only  of 
products,  Imt  of  la])or,  depended  upon  the  quantity  of  money 
in  circulation: 

"The  proposed  substitution  of  an  exclusive  metallic  cur- 
rency to  the  mixed  medium  with  which  we  have  Ijeen  so  long 
familiar,  is  forbidden  by  the  principles  of  eternal  justice.  As- 
suuiiiio-  the  currency  of  the  country  to  consist  of  two-thirds  of 
paper  and  one  of  specie;  and  assuming,  also,  that  the  money  of 
a  country,  whatever  may  be  its  component  parts,  regulates  all 
^■alues,  and  expresses  the  true  amount  which  the  debtor  has  to 
pay  liis  creditor,  the  effect  of  the  change  upon  that  relation, 
and  U])on  the  property  of  the  country,  would  be  most  ruinous. 
All  ])ro]>erty  would  be  reduced  in  value  to  one-third  of  its  pres- 
ent nomnial  amount,  and  every  debtor  would,  in  effect,  have  to 
pay  tliree  times  as  much  as  he  had  contracted  for.  The  pres- 
sure of  our  foreign  do1)t  would  be  three  times  as  great  as  it  is, 
while  the  six  hundred  millions,  which  is  about  the  sum  now 
])robably  due  to  the  l)anks  from  the  people,  would  be  multi- 
jilied  into  eighteen  hundred  millions!  *  *  *  Have 
gentlemen  reflected  upon  the  consequences  of  their  system  of 
depiction?  I  have  already  stated  that  the  country  is  l)orne 
down  by  a  weight  of  debt.  If  the  currency  Ite  greatly  dimin 
ished,  as  beyond  all  example  it  lias  l)een,  how  is  t1us  debt  to  he 
extinguished  ?     Property,  the  resource  on  which  the  debtor  re- 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  ♦>!) 

lied  for  his  pajnient,  will  decline  in  value,  and  it  may  happen 
that  a  man,  who  honestly  contracted  debt,  on  tlie  faith  of  prop- 
erty which  had  a  value  at  the  time  fully  adequate  to  warrant 
the  debt,  will  find  himself  stripped  of  all  his  property,  and  his 
debt  remain  unextinguished.  The  gentleman  from  Pennsylva- 
nia (Mr.  Buchanan)  has  put  the  case  of  two  nations,  in  one  of 
which  the  amount  of  its  currency  shall  be  double  what  it  is  in 
the  other,  and,  as  he  contends,  the  prices  of  all  property  will 
be  double  in  the  former  nation  of  what  they  are  in  the  latter. 
If  this  be  true  of  two  nations,  it  must  be  equally  true  of  one, 
whose  circulating  medium  is  at  one  period  double  what  it  is  at 
another.  Now%  as  the  friends  of  the  bill  argue,  we  have  been„ 
and  yet  are  in  this  inflated  state;  our  currency  has  been  double,, 
or,  in  something  like  that  proportion,  of  what  was  necessary, 
and  we  must  come  down  to  the  lowest  standard.  Do  they  not 
perceive  that  inevitable  ruin  to  thousands  must  be  the  inevita- 
ble consequence  ?  A  man,  for  example,  owning  property  to 
the  value  of  five  thousand  dollars,  contracts  a  debt  for  five 
thousand  dollars.  By  the  reduction  of  one-half  of  tlie  currency 
of  the  country,  his  property  in  effect  becomes  reduced  to  tl^ 
value  of  two  thousand  five  hundred  dollai'S.  But  his  debt  un- 
dergoes no  corresponding  reduction.  He  gives  up  all  his  prop- 
erty, and  remains  still  in  debt  two  thousand  five  hundred  dol- 
lars. Thus  this  measure  will  operate  on  the  debtor  class  of  the 
nation,  always  the  weaker  class,  and  that  wdiich,  for  that  rea- 
son, most  needs  the  protection  of  government. 

But  if  the  effect  of  this  hard-money  policy  upon  the  debtor 
class  be  injurious,  it  is  still  more  disastrous,  if  possible,  on  tlie 
laboring  classes.  Enterprise  will  be  checked  or  stopped,  e'Ai- 
ployment  will  become  difliciilt,  and  the  poorer  classes  will  be 
subject  to  the  greatest  privations  and  distresses.  Heretofore  it 
has  been  one  of  the  pretensions  and  boasts  of  the  dominant 
party,  that  they  sought  to  elevate  "the  poor  by  depriving  the 
rich  of  und-ue  advantages.  Now  their  policy  is,  to  reduce  tlie 
wages  of  labor,  and  this  is  openly  avowed;  and  it  is  ai-gued  Ity 
them,  that  it  is  necessary  to  reduce  the  Avages  of  American  la- 
bor to  the  low^  standard  of  European  labor,  in  order  to  enable 
the  American  manufacturer  to  enter  into  a  successful  competi- 
tion with  the  European  manufacturer  in  the  sale  of  their  I'e- 
spective  fabrics.  Thus  is  this  dominant  pai-ty  perpetually 
changing;  one  day  cajoling  the  poor,  and  fuhninatiiig  against 
the  rich,  and  the  next,  cajoling  the  rich,  and  fulminating 
aga.inst  the  poor.  It  was  but  yesterday  that  we  liei;rd  that  all 
who  were  trading  on  borrowed  capital,  ought  to  break.     It  was 


YO  PHILOSOPHY     OF     PRICE. 

but  yesterday  we  heard  denounced  the  long-established  policy 
of  the  country,  ]>y  which,  it  was  alleged,  the  poor  were  made 
poorer,  and  the  rich  ^vere  made  richer  .       ,      ,. 

Mr  President,  of  all  the  subjects  of  national  policy,  not  one 
ouo-ht  to  be  touched  with  so  much  delicacy  as  that  of  the  wages 
in  other  words,  the  bread,  of  the  poor  man.     In  dwelling,  as  i 
have  often  done,  with  inexpressible  satisfaction  upon  the  many 
advantages  of  our  country,  there  is  not  one  that  has  given  me 
more  delight  than  the  high  price  of  manual  labor,      i here  is 
not  one  which  indicates  more  clearly  the  prosperity  of  the  mass 
of  the  community.     In  all  the  features  of  human  society,  there 
are  none,  I  think,  which  more  decisively  display  the  general 
welfare,  than  ■^. permanent  high  rate  of  wages,  and  ,x  permanent 
hio-h  rate  of  interest.     Of  course,  I  do  not  inean  those  exces- 
sively high  rates,  of  temporary  existence,  which  result  from 
sudden  and  unexpected  demands  for  labor  or  capital,  and  which 
may,  and  generally  do,  evince  some  unnatural  and  extraordina- 
ry stke  of^things;  but  I  mean  a  settled,  steady  and  durable  high 
rate  of  wages  of  lal)or,  and  interest  upon  money,     feuch  a  state 
demonstrates  activity  and  profits  in  all  the  departments  of  busi- 
ness    It  proves  that  the  employer  can  afford  to  give  high 
wa<res  to  the  laborer,  in  consequence  of  the  profits  of  his  busi- 
ness and  the  borrower  high  interest  to  the  lender,  in  conse- 
(luence  of  tl>e  gain  which  he  makes  by  the  use  of  capital.     Un 
t]ie  contrary,  in  countries  where  business  is  dull  and  ianguish- 
ino-,  and  all  the  walks  of  society  are  full,  the  small  profits  that 
are  made  will  not  justify  high  interest  or  high  wages. 

In  another  speech  later  upon  the  same  subject  he  spoke  as 

follows: 

"And  what  is  the  remedy  to  be  provided  for  this  most  mi- 
hapi)y  state  of  the  country  i!     I  have  conversed  freely  ^nth  the 
niem'bcj-s  of  the  Philadelphia  committee.     They  are  real,  prac- 
tical working  men— intelligent,  well-acquainted  with  the  gen- 
eral condition,  and  with  the  sufterings  of  their  particular  com- 
munity     No  one,  who  has  not  a  heart  of  steel,  can  listen  to 
thcMi,\vithout  feeling  the  deepest  sympathy  for  the  privations 
and  sufferings  unnecessarily  brought  upon  the  laboring  classes. 
P.^th  the  committee  and  the  memorial  declare  that  their  reh- 
ai.cc  is,  exclusively,  on  the  leyidative  l)ranch  of  the  govera- 
inent      Mr.  President,  it  is  with  subdued  feeBings  of  the  pro- 
foimdest  humility  and  mortification  that  I  am  compelled  to  say 
that,  constituted 'as  Congress  now  is,  no  relief  will  be  afforded 


PEICE  A^'D  ITS  DEPENDENCE  UPON  CUKKENCY.  71 

by  it,  unless  its  members  shall  be  enlightened  and  instructed  by 
the  people  themselves.  A  large  portion  of  the  body,  whatever 
jiiay  be  their  private  judgment  upon  the  course  of  tlie  presi- 
dent, believe  it  to  be  their  duty,  at  all  events  safest  for  tlieni- 
selves,  to  sustain  him^  without  regard  to  the  consequences  of 
his  measures  upon  the  public  interests.  And  nothing  but  clear, 
decided,  and  unequivocal  demonstrations  of  the  popular  disap- 
probation of  what  has  been  done,  will  divert  them  from  tlieir 
present  purpose. 

But  there  is  another  quarter  w'hich  possesses  sufficient 
power  and  intluence  to  relieve  the  public  distresses.  In  twen- 
ty-four hours  the  executive  branch  could  adopt  a  measure  which 
would  afford  an  efficacious  aiid  substantial  remedy,  and  re- 
establish conlidence.  And  those  w^ho,  in  this  chamber,  support 
the  administration,  could  not  render  a  better  service  than  to  re- 
pair to  the  executive  mansion,  and,  placing  before  the  chief 
magistrate  the  naked  and  undisguised  truth,  prevail  upon  him 
to  retrace  his  steps  and  abandon  his  fatal  experiment.  No  one, 
sir,  can  perform  that  duty  with  more  propriety  than  yourself. 
You  can,  if  you  will,  induce  him  to  change  his  course.  To  you, 
then,  sir,  in  no  unfriendly  spirit,  but  with  feelings  softened 
and  subdued  by  the  deep  distress  which  pervades  every  class  of 
our  countrymen,  I  make  the  appeal.  By  your  official  and  per- 
sonal relations  with  the  president,  you  maintain  with  him  an 
intercourse  which  I  neither  enjoy  nor  covet.  Go  to  him  aiid 
tell  him,  without  exa^eration,  but  in  the  language  of  truth 
and  sincerity,  the  actual  condition  of  his  bleeding  country.  Tell 
him  it  is  nearly  ruined  and  undone,  by  the  measui-es  which  he 
has  been  induced  to  put  in  operation.  Tell  him  that  his  exper- 
iment is  operating  on  the  nation  like  the  philosopher's  experi- 
ment upon  a  convulsed  animal  in  an  exhausted  receiver,  and 
that  it  nmst  expire  in  agony,  if  he  does  nut  pause,  give  it  fj-ee 
and  sound  circulation,  and  suffer  the  energies  of  tlie  people  to 
be  revived  and  restored.  Tell  him  that,  in  a  single  city,  more 
than  sixty  bankruptcies,  involving  a  loss  of  upward  of  fifteen 
millions  of  dollars,  have  occurred.  Tell  him  of  the  alarming 
decline  in  the  value  of  all  property,  of  the  dei)reciation  of  all 
the  products  of  industry,  of  the  stagnation  in  every  branch  of 
business,  and  of  the  close  of  numerous  manufacturing  estab- 
lishments, which,  a  few  short  months  ago,  were  in  active  and 
flourishing  operation.  Depict  to  him,  if  you  can  find  language 
to  portray,  the  heart-rending  wretchedness  of  thousands  of  the 
working4l^ses  cast  out  of  employment.  Tell  him  of  tlic  tears 
of  helpless  widows,  no  longer  able  to  earn  their  liread;  and  of 


72  PHrLOSOPHY     OF     PRICE. 

unclad  and  unfed  orphans,  wlio  have  been  driven,  by  his  poli- 
cy, out  of  the  busy  pursuits  in  which  but  yesterday  they  were 
gaining  an  honest  livelihood." 

Was  eloquence  ever  more  logical  ?  Could  language  portray 
our  ])resent  situation  more  completely?  This  whole  magnifi- 
cent plea  was  for  more  currency.  That  through  this  medium 
the  distress  in  the  land  might  disappear  and  bring  relief  to  the 
toiling  millions. 

Henry  C.  Carey,  in  his  treatise  on  Wealth: 

"Tlie  money  price  of  labor  would  have  fallen  with  the 
increasi'd  difficulty  of  procuring  the  precious  metals,  but  for 
the  substitution  tlierefor  of  credits  in  the  form  of  drafts,  bank 
notes,  etc.,  in  most  of  the  operations  of  the  world." 

From  a  S2)eech  in  Congress  on  the  cui'rency; 

"Undue  contraction,  on  the  other  hand,  is  fraught  with 
like  evil  to  tlie  same  classes.  I  cannot  better  illustrate  this  than 
by  quoting  from  Sir  Archibald  Alison,  in  his  'England  in  1815 
and  1845;  or,  a  Sufficient  and  Contracted  Currency,'  wherein 
he  says: 

'The  period  of  a  contraction  of  the  currency  and  conse- 
quent fall  in  the  money  prices  of  all  the  articles  of  human  con- 
suniption  is  one  in  which  great  profits  are  sure  to  be  realized 
l)y  the  larger  capitalists,  and  great  losses  sustained  hj  the  small- 
er. The  former  prosper  l)ecause  the  magnitude  of  their  trans- 
actions enables  them  to  realize  a  handsome  income  upon  the 
whole  from  a  declining  and  at  length  almost  inconceivably 
small  amount  of  profit  from  each  transaction;  and  they  gradu- 
ally get  the  monopoly  of  the  market  in  their  own  line  of  busi- 
ness by  the  extinction  of  the  lesser  capitalists  whom  the  fall  in 
the  ])rice  of  conmiodities  has  ruined,  or  the  diminished  profits 
liave  re])elled  from  entering  into  competition  with  them. 
*  *  *  Small  traders,  therefore,  and  farmers  without 
ca])it;d  are  si)eedily  ruined  in  such  a  state  of  things,  and  tlie 
laboj'ing  ov  destitute  condition  is  only  rendered  the  more  dis- 
tressing l)y  the  contrast  which  it  affords  to  the  wealth  and  s})len- 
dor  M^ith  which  the  holders  of  large  capital  in  the  same  line  of 
business  are  surrounded.  *  *  *  A  ]>eriod  of  contract- 
ed currency  is  one  of  embarrassment,  difficulty,  and  generally, 
in  the  end,  of  insolvency  to  the  small  farmer  and  moderate 
land-holder. 

*         *         *         If  a  supply  proportioned  to  the  increase 


s 


PKICE  AKD  ITS  DEPENDENCE  UPON  CVRKENCY.  73 

of  men  and  the  wants  of  their  commercial  intercourse  ig  nut 
afforded,  the  circulating  medium  will  become  scarce;  it  will 
rise  in  price  from  that  scarcity,  and  become  accessible  only  to 
the  more  rich  and  affluent  classes.  The  indnstrioTis  pooi-  or 
those  engaged  in  business  but  possessed  of  small  capital  will  be 
the  first  to  suffer." 

The  following  short  extract  from  Doubleday's  Financial" 
History  of  England  will  give  an  idea  of  some  of  the  conse- 
quences of  that  act  of  folly; 

"As  the  memorable  1st  of  May,  1823,  drew  near,  the  coun- 
try bankers  as  w^eil  as  the  bank  of  England,  naturally  prepared 
themselves,  by  a  gradual  narrowing  of  their  circulation,  for  the 
dreaded  hour  of  gold  and  silver  payments  'on  demand,'  and 
the  withdrawal  of  the  small  notes.  We  liave  already  seen  the 
fall  in  prices  produced  by  this  universal  narrowing  of  the  pa- 
per circulation.  The  effects  of  the  distress  produced  all  over 
the  country,  the  consequence  of  this  fall,  we  have  yet  to  see. 

The  distress,  ruin  and  Imnkruptcy  ichlch  rww  took  place 
were  universal,  affecting  hoth  the  great  interests  of  land  and 
trade,  but  among  the  landlords  whose  estates  were  burdened 
by  mortgages,  jointures,  settlements,  legacies,  etc.,  the  effects 
were  most  marked  and  out  of  the  ordinary  course.  In  hun- 
dreds of  cases,  from  the  tremendous  reduction  in  the  price  of 
land  which  now  took  place,  the  estates  barely  sold  for  as  nuich 
as  would  pay  off  the  mortgages;  and  hence  the  ownei-s  were 
stripped  of  all  and  made  beggars.  I  was  myself  personally  ac- 
quainted with  one  of  the  victims  of  this  terrible  measure.  He 
was  a  school-fellow,  and  inherited  a  good  fortune,  made  princi- 
pally in  the  West  Indies.  On  coming  of  age  and  settling  with 
his  guardians,  he  found  himself  possessed  of  fully  £40,( )()(>; 
and  with  this  he  resolved  to  purchase  an  estate,  to  marry,  and 
settle  for  life.  He  was  a  young  man  addicted  to  no  vice,  of  a 
fair  understanding  and  most  excellent  heart,  and  was  connected 
with  friends  high  in  rank  and  likely  to  aff'oi'd  him  every  proper 
assistance  and  advice.  The  estate  was  purchased,  I  believe, 
about  the  year  1812  or  1813,  for  £80,000,  one  moiety  of  the 
purchase  money  being  borrowed  on  mortgage  of  the  land 
bought.  In  1822-23  he  was  compelled  to  part  with  the  estate 
in  order  to  pay  off  his  mortgage  and  some  arrears  of  interest; 
and  when  this  was  done  he  was  left  without  a  shilling,  the  es- 
tate bringing  only  half  of  its  cost  in  1812!  Thus,  without  im- 
prudence or  fault  of  any  kind,  was  this  amiable  man,  together 
with  his  fauiily,  plunged  in  irretrievable  and  inevitable  ruin. 


T4  PHILOSOPHY     OF     PRICE. 

by  the  act  of  a  legiglatnre  wliieh  ouglit  to  liave  protected  botli, 
and  which  was  fully  warned  of  the  consequences  of  what  it  was 
about  to  do;  l)ut  which,  in  requital,  chose  to  laugh  those  who 
warned  to  utter  scorn.  My  readers  must  not  suppose  that  this 
Avas  eitlier  an  exaggerated  or  uncommon  case.  On  the  contra- 
ry, tlie  country  teemed  with  similar  examples,  and  on  the  com- 
mencement of  the  session  of  1823  the  tables  of  ])oth  houses 
were  loaded  with  petitions,  detailing  scenes  of  hardship  and 
destitution  appalling  in  the  extreme." 

That  great  man,  the  astronomer  Copernicus,  whose  amaz- 
ing genius  penetrated  and  discovered  a  truth  that  all  the  ages 
and  millions  of  men  who  had  gone  l)efore  him  failed  to  per- 
ceive or  to  comprehend — the  proper  movements  of  the  planets 
of  the  solar  system — in  his  treatise  '■'■Monete  Cudende  Ratio^'' 
addressed  to  tjie  king  of  Poland  in  the  first  part  of  the  16th 
century,  said : 

"Numberless  as  are  the  evils  by  which  kingdoms,  princi- 
palities and  republics  are  wont  to  decline,  these  four  are,  in  my 
judgment,  most  Ijaleful:  civil  strife,  pestilence,  sterility  of  the 
soil,  and  corruption  of  the  c*oin.  The  first  three  are  so  mani- 
fest that  no  one  fails  to  apprehend  them;  hut  the  fourth^  ivhich 
covcernfi  inoiiey^  is  considered  hy  feio,  mid  those  the  most  rejiec- 
ti've^  sioice  it  is  not  hy  a  ljloii\  hut  little  hy  little,  and  through  a 
secret  and  ohscure  apiwoacli,  that  it  destroys  the  State.'''' 

Mr,  William  Jacob,  F.  R.  S.,  of  England,  in  his  profound 
examination  into  the  quantity  of  money  in  use  by  man  at  vari- 
ous periods  of  history',  states  the  quantity  j^robably  in  use  at 
tlie  time  of  the  Roman  Augustus,  and  gives  a  table  showing 
its  decrease  from  that  time  forward — throuo-h  the  exhaustion  of 
the  gold  and  silver  mines  known  to  man  prior  to  the  discovery 
of  the  American  continent.  I  can  only  spare  space  for  a  part 
of  his  table.  I  begin  with  the  time  of  Augustus,  and  close 
with  that  of  the  Saxon  heptarchy,  giving  a  few  intervening 
sums  to  show  the  rate  of  diminution : 


A.  I). 

14, 

£358,000,000 

About  $1790,000,000 

230, 

181,943,000 

"    909,000,000 

410, 

107,435,924 

"    537,000,000 

PRICE  AND  ITS  DEPENDEXCE  LTON  CURRENCY.  75 

662,         51,324.889      "    256,000,000 
806,         33,674,256      "    168,000,000 

Mr.  Jacobs  says : 

"If  we  take  a  view  of  Europe  during  the  existence  of  the 
Saxon  heptarchy  in  England,  we  shall  probably  find  the  scarci- 
ty of  money  and  the  depression  of  prices  to  have  reached 
their  lowest  point.  The  Komans,  in  abandoning  Britain,  Gaul, 
and  the  other  -western  portions  of  the  dominions  over  which 
their  power  had  once  extended,  had  carried  with  them  all  that 
was  portable  and  valuable.  We  select  a  few  facts  to  show  how 
very  small  must  have  been  the  quantity  of  the  money  at  that 
period  in  Britain,  and  how  very  low  was  the  metallic  valuation 
of  every  description  of  property." 

I  can  only  give  room  to  the  following  quotation  of  prices 

made  by  Mr.  Jacob : 


£ 

s. 

d. 

Price  of  a  slave  or  man, 

2 

16 

3 

"             horse. 

1 

15 

2 

"             mule,  or 

ass, 

0 

14 

1 

"             ox, 

0 

7 

2 

"             cow. 

0 

6 

2 

"             swine. 

0 

1 

10 

"             sheep. 

0 

1 

2 

«             goat. 

0 

0 

4 

And  such  was  the  power  of  the  Nobles  over  the  money- 
less people,  many  of  whom  were  held  in  slavery,  while  others 
were  reduced  to  a  condition  of  servitude  little,  if  any,  prefera- 
ble to  actual  slavery,  that  the  price  of  a  hawk  or  a  greyhound 
was  the  same  as*  that  of  a  man,  and  the  robbing  of  a  hawk's 
nest  was  as  great  a  crime  in  the  eye  of  the  law,  as  was  the  mur- 
der of  a  human  being. 

Numerous  laws  prohibited  the  farmers  from  weeding  and 
hoeing,  so  that  the  young  partridges  should  not  be  disturbed; 
steeping  seeds  lest  it  should  harm  the  game,  and  manuring  with 
night  soil  for  fear  of  injuring  the  flavor  of  the  partridges. 

Regarding  this,  and  a  later  period  of  time,  Sir  Archi])ald 
Allison,  in  his  history  of  Europe,  says : 

'"'■The  two  greatest  events  in  the  history  of  manJcind  have 


T/l 


6  PBILOSOPHY  OF  PEICE. 

been  hrought  about  by  a  successive  contraction  and  expansion 
in  the  clrcidatlng  medium  of  society.  The  fall  of  tlie  Roman 
Empire,  so  long  ascribed  in  ignorance  to  slavery,  to  heathen- 
ism, and  moral  corruption,  was  in  retJitj  brought  about  by  a 
decline  in  the  silver  and  gold  mines  of  Spain  and  Greece, 
.  .  .  .  And  as  if  Providence  had  intended  to  reveal  in  the 
clearest  manner  possible  the  influence  of  this  mighty  agent  on 
human  affairs,  the  i-esurrection  of  mankind  from  the  ruin  this 
cause  had  produced  was  owing  to  the  directly  opposite  set  of 
agencies  being  put  in  operation.  Columbus  led  the  way  in  the 
career  of  renovation;  when  he  spread  his  sails  across  the  Atlan- 
tic, he  bore  niimkind  and  its  fortunes  in  his  bark.  .  .  .  The 
annual  supply  of  the  precious  metals — of  money— for  the  use 
of  the  globe  was  tripled;  before  a  century  had  elapjsed  the 
■price  0'^  every  species  of  produce  was  quadrupled.  Tlie  rceight 
of  debt  and  taxation  InsensiMy  wore  off  under  the  influence 
of  that  prodigious  increase;  in  the  renovation  of  industry  the 
■relations  of  society  were  changed^  the  weight  of  feudalism  cast 
off.,  the  rights  of  man  established.  Among  the  many  concur- 
ring causes  which  conspired  to  bring  about  this  mighty  con- 
summation, the  most  important,  though  hitherto  the  least  ob- 
served, was  the  discovery  of  jVIexico  and  Peru" — (their  gold 
and  silver  mines). 

Bryant,  in  his  work  on  Money,  says : 

''''Any  reduction  in  the  pirice  v^hich  the  producer  or  the  art- 
isan is  able  to  obtain  for  his  labor^or  the  p)roduct  of  his  labor., 
is  an  injury,  misfortune  and  loss  to  every  single  member  of 
society.^  excepting  solely  those  who  live  npon  the  interest  of 
loaned  money.  If  tlie  reduction  is  temporary,  then  the  loss  is 
temporary;  if  it  is  permanent,  then  the  loss  is  permanent." 

Albert  Gallatin,  ex-Secretary  of  the  United  States  Treas- 
ury, in  his  work  on  Money,  published  in  1831,  says: 

"It  is  well  known  that  the  discovery  of  America  was  fol- 
lowed by  a  great  and  permanent  fall  in  the  price  of  the  pi'e- 
cious  metals,  which  reduced  it  to  one-fourth  of  their  previous 
relative  value  to  all  other  commodities." 

Humboldt  says  that  the  gold  and  silver  money  in  circula- 
tion in  the  eighteenth  century  is — at  the  time  he  wrote — thirty 
times  greater  than  in  the  jifteenth  century,  and  that  its  value 
or  purchasing  power  was  only  one-twelfth  of  what  it  then  was 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.        77 

^ — that  is,  8  1-3  cents  would  then  buy  as  much  as  100  would  at 
tlie  time  he  wrote. 

Professor  Bonamy  Price  says  that  the  purchasing  power 
of  the  so-called  precious  metals  has  fallen  fourteen  times  since 
the  reign  of  the  Henrys — that  is,  7  1-7  cents  would  then  buy 
as  much  as  100  will  now. 

The  Boston  Daily  Advertiser  of  March  11,  1875,  says: 

"The  prime  element  in  determining  the  value  of  money, 
whether  gold  or  paper,  is  quantity,  and  it  is  subject  to  the  same 
laws  as  other  commodities.  Increase  the  quantity,  it  will  buy 
less.  In  other  words,  it  produces  a  rise  in  prices,  but  no  in- 
crease in  values." 

Dr.  Soetbeer,  the  great  German  authority,  says : 

"The  value  of  money  has  fallen  through  the  issue  of  pa- 
per money,  as  well  as  through  the  increased  productions  of 
gold  and  silver." 

Judge  John  Barnard  Byles,  one  of  England's  greatest  ju- 
rists, in  his  work,  Popular  Political  Economy,  page  154,  says : 

"Men  talk  glibly  of  variations  in  the  currency.  Few  re- 
flect on  the  awful  extent  to  which  such  changes  affect  the  pros- 
perity of  all  ranks.  The  laborer,  the  ])auper,  and  the  beggar 
are  as  much  interested  in  the  currency  question  as  the  maim- 
facturer,  the  shopkeeper,  or  the  great  proprietor  of  land  or 
funds,  and  even  more. 

Sudden  and  great  alterations  in  the  amount  of  value  of 
the  circulating  medium  are  at  best  transfers  of  property — gi- 
gantic rol>beries ;  they  are  often  much  worse ;  they  involve 
wanton  destruction  of  immense  property,  and  stop])age_of  in- 
dustry. 

The  cure  provided  by  the  Act  of  1844,  for  an  adverse  bal- 
ance of  trade,  and  for  every  export,  or  tendency  to  an  export 
of  the  precious  metals,  is  a  sudden  and  great  diminution  in  the 
quantity  of  the  currency — a  rise  in  its  value — next,  a  great  and 
sudden  rise  in  the  rate  of  interest — a  fall  in  the  price  of  all 
things — a  fearful  injury  to  all  the  industrious  classes. 

"What  you  expected  always  eventually  happened;  the  bal- 
ance of  trade  brought  the  bullion  back.  The  issue  of  notes 
was  then,  in  easier  times,  contracted  to  its  safe  and  ordinary 
amount.  You  passed  through  the  crisis  with  little  or  no  altera- 
tion in  the  value  of  money,  or  rate  of  interest.     When  the 


78  PHILOSOPHY    OF    PEICE. 

bullion  went  away,  notes,  by  supplying  its  place,  broke  the 
shock  to  credit ;  when  bullion  returned,  the  withdraM'al  of 
tliose  notes  still  preserved  the  equilibrium.  The  paper  portion 
of  the  currency,  over  and  above  its  other  advantages,  was  then 
an  ingenious  contrivance  in  the  nature  of  a  spring  or  elastic 
band,  which,  enabling  you  safely  to  expand  the  currency  in 
times  of  distress,  and  to  contract  it  again  in  times  of  prosperi- 
ty thus  equalized  and  averaged  the  tension.  Lord  Ashburton 
lias  shown  how  the  currency  often  was  relaxed  in  periods  of 
severe  pressure  with  }>erfect  safet3\  And  this  occasional  relax- 
ation in  times  of  difficulty  was  the  ordinary  course  of  proceed- 
ing long  before  the  Bank  Restriction  Act.  Its  advantage  was 
well  understood  even  as  early  as.  the  beginning  of  the  last  cen- 
tury. Addison,  writing  in  the  time  of  Queen  Anne,  says: 
'When  the  bullion  leaves  us,  we  make  credit  supply  its  place.' 
There  was  in  the  paper  currency  a  union  of  convertibility  with 
elasticity.  Tliere  was  a  compensatory  and  self-adjusting  actdon 
which  artificially  secured  uniformity  of  value,  and  made  a 
mixed  currency,  partly  metallic,  partly  paper,  a  much  better 
and  more  invariable  standard  of  value  than  a  mere  metallic  cur- 
rency could  possibly  have  been. 

You  can  now  no  longer  rely  on  an  average  favorable  bal- 
ance of  trade;  there  may  not  only  be  (as  there  will  certainly 
be)  periodical  drains  of  the  precious  metals,  but  there  may  be 
a  perennial  stream  running  out,  not  as  formerly  less  than  the 
perennial  stream  running  in,  but  much  larger. 

How  is  it  now  proposed  to  meet  the  drain  when  the  mis- 
ery begins  to  be  felt  ? 

Not  as  before,  by  supplying  the  void  with  notes.  That  is 
no  longer  consistent  with  the  preservation  of  a  metallic  basis 
to  the  currency;  for  we  are  told,  and  truly  told,  that  if  new 
notes  were  issued  as  fast  as  gold  went  out,  the  drain  of  gold 
would  be  continually  going  on,  till  all  the  gold  had  left  the 
kingdom,  the  l)anknote  would  be  inconvertible,  and  another 
bank  i-estriction  act  would  be  inevitable. 

No,  it  is  to  l>e  stopped  violently  by  a  diminution  in  the 
quantity,  and  consequent  rise  in  the  value,  of  the  whole  cur- 
rency, ]ust  as  if  it  were  entiiely  metallic.  No  notes  are  to  be 
issued  in  place  of  tlie  gold  that  goes  out.  Nay,  the  law  may 
even  contract  the  notes  as  the  gold  goes  out.  Prices  of  every- 
thing are  to  fall.  The  industrious  classes  are  to  see  their  prop- 
erty thus  taken  from  thein,  and  their  debts  and  incumbrances 
thus  really  augmented.  Industry  ig  to  be  paralyzed,  trade 
stopped,  and  the  pressure  of  the  public  burthens  "indelinitely 


PKICE  AND  ITS  DEPENDENCE  IPON  CfKKENCV.  79 

aggravated;  wliile  the  transactions  of  the  empire  are  being 
chvarfed  and  stunted  to  tit  a  sli(jrt  allowance  of  the  circulating 
medium  of  the  civilized  world. 

Then  it  is  said  prices  will  be  effectually  beaten  down,  and 
80  at  length  imports  will  be  checked,  exports  promoted,  and  an 
adverse  balance  of  trade  naturally  redressed.  Is^ever  mind, 
though  this  desirable  and  necessary  result  should  be  produced 
by  tlie  diminution  or  cessation  of  the  ordinary  operations  of 
industry  and  commerce,  and  the  bankruptcy  of  otherwise  sol- 
vent houses. 

It  will  be  seen  at  a  glance  how  insignificant  the  aggregate 
amount  of  coin  and  notes  is,  compared  \\\i\\  the  aggregate 
amount  of  bankers'  checks,  bills  of  exchange,  and  money  of 
account. 

But  then  the  quantity  and  value  of  these  checks,  'bills  and 
money  of  account,  depend  entirely  on  the  quantity  and  value 
of  the  coin  and  notes.  Diminish  the  quantity  of  coin  and 
notes  by  five  per  cent.,  and  you  may  augment  the  exchangeable 
value  of  the  residue.  e\'en  of  the  coin  and  notes,  by  twenty  or 
fifty  per  cent;  for  when  the  quantity  of  money  or  of  any  other 
article  of  first  necessity,  but  of  limited  supply,  is  diminished, 
its  exchangeable  value  rises  in  a  much  higher  degree  than  the 
degree  of  diminution.  Added  to  all  which  there  is  the  effect 
of  uncertainty  and  panic.  That,  however,  is  the  least  part  of 
the  mischief.  Touch  the  coin  and  notes,  the  other  and  greater 
currency  shrinks  at  once,  like  the  sensitive  plant. 

And  no  one  can  tell  the  proportion  in  which,  when  you 
curtail  the  lesser  currency,  the  greater  is  actually  curtailed;  in 
some  instances  it  may  be  in  a  less  proportion,  but  in  many  in- 
stances a  far  greater  proportion.  The  enhancement  in  value  of 
the  greater  currency  is  the  same,  but  who  can  tell  or  conjecture 
what  the  diminution  in  quantity  is? 

Lord  Ashburton  declared  that  the  importations,  large  as 
they  necessarily  were,  were  not  more  than,  under  a  wiser  man- 
agenient  of  the  currency,  the  country  could  have  easily  liorne. 
Mr.  Mill  says:  'The  crisis  of  1847  was  of  that  sort  which  the 
provisions  of  the  Act  had  not  the  smallest  tendency  to  avert, 
and  when  the  crisis  came,  the  mercantile  difliculties  were  prob- 
ably dodhltd  by  its  existence.' 

And  why  was  the  industry  of  the  country  subjected  to 
this  horrible  torture  ^  That  an  adverse  balance  of  trade  might 
be  con-ected  by  what  is  called  the  natural  flow  of  the  pi-ecious 
metals.  That  a  theory  might  be  carried  out.  In  vain  did  men, 
grown  gray  in  business,  remonstrate  against  the  measure  three 


80  PHILOSOPHY  OF  PRICE. 

years  before.     It  was  carried  in  contemptuous  defiance  of  their 

warnin:^?. 

Few  subjects  are  so  intricate  as  tlie  distribution  of  the  pre- 
cious metals  among  the  countries  of  the  world.  Many  consid- 
erations are  overlooked  by  those  who  prophesy  that  the  evil 
will  work  its  own  cure.  David  Hume  says  that  a  progressive 
increase  in  the  quantity  of  the  precious  metals,  and  their  de- 
clining value  in  any  country,  is  favorable  to  a  progressive  in- 
crease'of  industry.  And  no*^  doubt  that  is  so.  A  stream,  there- 
fore, of  the  precious  metals  poured  into  a  country,  produces 
effects  exactly  the  converse  of  the  effects  which  its  dereliction 
produces  in  the  country  which  it  is  leaving.  This  fertilizing 
stream,  in  the  country  to  which  it  goes,  stimulates  industry, 
multiplies  transactions,  creates  its  own  demand,  and  counter- 
acts its  tendency  to  return.  Our  industry  is  crippled — our 
ueio-hbor's  is  augmented.  We  permanently  need  the  bullion 
less— lie  permanently  needs  it  more." 

The  following  is  from  the  celebrated  report  on  the  high 
price  of  gold  bullion  made  to  the  English  Parliament  in  1810: 

"An  increase  or  diminution  in  the  demand  for  gold,  or 
what  comes  to  the  same  thing,  a  diminution  or  increa.se  in  the 
ger-eral  supply  of  gold,  will,  no  doubt,  have  a  material  effect 
iipon  the  money  prices  of  all  other  articles.  An  increased  de- 
mand for  gold,  and  a  consequent  scarcity  of  that  article,  will 
make  it  more  valualjle  in  proportion  to  all  other  articles;  the 
same  quai^tity  of  gold  will  purchase  a  greater  quantity  of  any 
■  other  article  than  it  did  before;  in  other  words,  the  real  price 
of  gold,  or  the  quantity  of  commodities  given  in  exchange  for 
it.  will  rise,  and  the  money  prices  of  all  commodities  will  fall; 
the  money  price  of  gold  itself  will  remain  unaltered,  but  the 
prices  of  all  other  commodities  will  fall.  That  this  is  not  the 
present  state  of  things  is  abundantly  manifest;  the  prices  of  all 
commodities  have  risen,  and  gold  appears  to  have  risen  in  its 
price  only  in  common  M'ith  them.  If  this  common  effect  is  to 
be  ascriljed  to  one  and  the  same  cause,  that  cause  can  only  be 
foiuid  in  the  state  of  the  currency  of  this  country. 

The  same  rise  of  the  market  price  of  gold  above  its  mint 
price  will  take  place,  if  the  local  currency  of  this  particular 
country,  being  no  longer  convertil)le  into  gold,  should  at  any 
tin)e  be  issued  to  excess.  That  excess  cannot  be  exported  to 
other  countries,  and,  not  being  convertible  into  specie,  it  is  not 
necessarily  returned  upon  those  who  issued  it;  it  remains  in  the 
channel  of  circulation,  and  is  gradually  absorbed  Ijy  increasing 


PKICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  81 

tlie  prices  of  all  eoniniodities.  An  increase  in  the  quantity  of 
the  local  currency  of  a  particular  country,  will  raise  prices  in 
that  country  exactly  in  the  same  manner  as  an  increase  in 
the  general  supply  of  precious  metals  raises  ]»rices  all  over 
the  world.  By  means  of  the  increase  of  quantity,  the  value 
of  a  given  portion  of  that  circulating  medium,  in  exchange 
for  other  commodities,  is  lowered;  in  other  words,  the  money 
prices  of  all  other  commodities  are  raised,  and  that  of  bul- 
lion with  the  rest. 

The  same  amount  of  paper  may  at  one  time  be  less 
than  enough,  and  at  another  time  more.  The  quantity  of 
currency  required  will  vary  in  some  degree  with  the  extent 
of  trade;  and  the  increase  of  our  trade,  which  has  taken 
place  since  the  suspension,  must  have  occasioned  some  in- 
crease in  the  quantity  of  our  currency.  But  the  quantity  of 
currency  bears  no  iixed  proportion  to  the  quantity  of  com- 
modities ;  and  any  inferences  proceeding  upon  such  a  suppo- 
sition would  be  entirely  erroneous.  The  effective  currency  of 
the  country  depends  upon  the  quickness  of  circulation,  and  the 
number  of  exchanges  performed  in  a  given  time,  as  well  as 
upon  its  numerical  amount;  and  all  the  cii'cumstances,  which 
have  a  tendency  to  quicken  or  to  retard  the  rate  of  circulation, 
render  the  same  amount  of  currency  more  or  less  adequate  to 
the  wants  of  trade.  A  much  smaller  amount  is  required  in  a 
high  state  of  public  credit,  than  when  alarms  make  individuals 
call  in  their  advances,  and  provide  against  accidents  by  hoard- 
ing ;  and  in  a  period  of  commercial  security  and  private  confi- 
dence, than  when  nmtual  distrust  discourages  pecuniary 
arrangements  for  any  distant  time." 

The  Right  Hon.  George  I.  Goschen,  M.  P.,  an  eminent 

English  linancier,  in  an  address  delivered  before  the  Bankers' 

Institute,  April,  1883,  said  : 

"If  we  take  the  $50,000,000  as  the  amount  required  for 
arts  and  manufactures  and  for  all  purposes  other  than  circula- 
tion, and  subtract  that  sum  from  the  $100,000,000  of  annual 
supply,  it  leaves  for  the  purposes  of  circulation  $50,000,000 
only,  and  on  this  hypothesis  the  extraordinary  demand  of  $1,- 
000,000,000  would  absorb  the  available  yield.  Economists  will 
accordingly  ask  themselves  what  result,  if  any,  is  such  a  phe- 
nomenon likely  to  have  produced.  I  think  there  is  scarcely 
an  economist  but  would"  answer  at  once  :  'It  is  probable,  it  is 
almost  necessary,  it  is  according  to  the  laws  and  the  principles 


82  PHILOSOPHY    OF    PRICE. 

of  currency,  that  siicli  a  phenomenon  must  be  followed  by  a 
fall  in  the  prices  of  commodities  generally.'  Let  us  now  turn 
to  the  other  side  of  the  question  and  examine  the  range  of  the 
prices  of  commodities,  and  see  whether  or  not  it  is  a  fact  that 
there  has  been  a  great  fall. 

For  the  figures  1  am  a]')0ut  to  place  before  you  I  am  in- 
debted to  Mr.  Giffin,  of  the  board  of  trade.  I  have  examined 
the  prices  of  commodities  as  published  l)y  the  board  of  trade, 
but  I  have  also  consulted  other  sources.  I  have  liere  a  classi- 
fication of  articles  under  certain  heads  showing  prices  in  the 
years  1 873  and  1 883  respectively.  (Here  he  gives  the  table.)  I  am 
bound  to  say  it  appears  to  me  that  these  figures  reveal  an  ex- 
traordinary state  of  things.  *  *  *  It  appears  to  me  that  if  it 
be  true  that  population  continually  increases,  and  that  there  is 
a  certain  increase  in  wealth,  an  additional  amount  of  circulation 
will  be  necessary  in  order  to  meet  the  increased  demand  unless 
there  are  compensating  counter  economies  by  the  extension  of 
the  check  system  and  other  methods.  On  the  one  hand  vou  un- 
doubtedly  have  increased  population.  You  also  have  an  in- 
crease of  wealth.  Then  again,  you  require  more  gold 
for  more  transactions.  Gold  has  two  or  three  functions 
to  perform  in  circulation.  It  has  to  supply  what  I  may 
call  pocket-money,  and  it  has  to  liquidate  large  transac- 
tions between  nations  and  nations,  and  what  is  almost  an  anala- 
gous  function,  it  has  to  remain  in  the  vaults  of  ]>ankers  on 
deposit  against  the  notes  that  are  issued  against  it ;  still  it  is  more 
simple  to  treat  these  two  latter  functions  as  one.  Such  being 
the  two  functions  of  gold,  if  the  population  increases  the  nec- 
essary pocket-money  must  increase,  and  if  the  transactions 
increase,  somewhat  more  is  required  for  liquidating  the  balan- 
ces. 

Let  us  now  consider  whether  the  economies  in  the  use  of 
gold  (checks  and  clearings)  have  been  as  great  as  the  increase 
in  the  population  and  as  the  increase  in  the  amount  of  gold  re- 
quired to  liquidate  the  balance  of  transactions.  Mr.  Gifiin, 
in  an  article  printed  in  the  Journal  of  the  Statistical  Society 
for  March,  1879,  expresses  the  opinion  that  the  United  King- 
dom was  thoroughly  'well  banked'  even  twenty  years  ago,  and 
that  there  have  been  no  new  devices  invented  during  the  last 
twenty  years  which  have  much  economized  the  use  of  gold  in 
the  United  Kingdom.  We  have  already  reduced  the  use  of 
gold  in  this  country  almost  to  a  minimum,  and  I  am  confirmed 
in  this  view  ])y  the  statement  that  the  total  circulation  of  gold 


PKICE  AIsD  ITS  DEPENDENCE   UPON  CURKENCY.  83 

in  England  increased,  according  to  tlie  estimate  of  the  a-.itliori- 
ties  of  the  Bank  of  England,  from  $515,000,000  to  $620,000,- 
000  betM-een  1870  and  1880.  This  would  mean,  and  it  is  a 
most  significant  fact,  that  in  this  country,  which  is  so  '  well 
banked,'  $100,000,000  more  circulation  was  nevertheless  re- 
quired in  1880  than  in  1870. 

As  regards  England,  then,  I  do  not  see  that  there  has  been  any 
economy  in  the  use  of  gold  to  counterbalance  the  increasing 
demand  of  the  population,  nor  are  we  aware — those  of  us  who 
have  been  able  to  look  into  the  matter — that  in  France  or  Ger- 
many, or  elsewhere,  the  economies  have  been  such  as  to  coun- 
terbalance the  increasing  demand  for  gold.  I  ain  now  brought 
to  the  point  that  if  there  is  any  truth  in  the  theory  that  the 
amount  of  circulation  stands  in  a  certain  relation  to  the  ques- 
tion of  price,  then  this  strain  upon  the  gold  circulation  must 
have  produced  an  effect  upon  prices.  We  have  to  deal  with 
the  fact,  let  us  look  at  it  how  we  will,  the  sovereign  goes 
further  than  it  used  to  go.  Happy,  then,  it  is  for  those  who 
have  the  sovereigns ;  on  the  other  hand,  unhappy  it  is  for 
those  who  liave  commodities  left  on.  hand  and  produce  which 

they  have  not  sold. 

*  *  *  * 

Let  us  now  assume  that  there  will  be  a  continuance  of  low 
prices ;  that  is  to  say,  a  continuance  of  the  increased  value  of 
gold.  Two  classes  would  be  permanently  affected.  One  is  the 
class  which  is  entitled  to  receive  gold.  They  will  l)e  mucli 
better  off.  The  class  of  debtors,  on  the  other  hand,  who  are 
bound  to  pay  a  given  amount  of  gold  for  a  long  period  to  come, 
will  ])e  much  worse  off.  In  the  same  way,  as  the  rise  in  prices 
is  generally  to  the  advantage  of  the  debtor,  so  a  fall  in  prices 
will  l)e  to  his  disadvantage.  The  holders  of  mortgaifCiS  would  l)e 
in  a  distinctly  favorable  position.  While  the  mortgages  would 
run,  they  will  continue  at  a  sum  that  will  be  on  the  constant 
increase  in  its  purchasing  power.  Those  who  have  borrowed 
the  sum  will  be  in  a  worse  position  by  having  their  means  of 
payment  constantly  diminishing  in  price.  The  influence  of 
this  circumstance  on  land  owners  will  not  be  overlooked. 
Land  owners  who  have  borrowed  money  on  their  estates  will 
be  under  contract  to  pay  a  sum  which  represents  more  value 
than  when  the  loan  was  made,  while  the  produce  of  the  land,  if 
it  should  fall  in  price  like  other  commodities,  would  not  secure 
the  same  amount  of  gold.  It  is  impossible  to  see  how  farmers 
should  be  able  to  continue  to  pay  the  same  amount  of  gold  for 


g4  PHILOSOPHY  or   PRICL. 

rent  if  the  prices  of  what  tliey  raise  from  tlie  soil  slioiild  per- 
inariently  falh 

A  distinguished  French  economist  has  said  that  he  was 
not  sure  whether  France  would  have  been  bankrupt  in  1848 
but  for  that  great  increase  in  the  production  of  gold,  which 
created  a  degi-ee  of  commercial  prosperity  which  enabled  the 
French  to  escape  from  their  difficulties.  I  have  heard  another 
distinguished  man  suggest  that  the  great  difficulties  of  the  old 
Koman  Empire  with  regard  to  laws  that  had  to  be  passed  for 
the  relief  of  debtors  was  due  to  the  fact  that  they  never  had  an 
expansive  currency,  but  that  the  supply  of  the  precious  metals 
was  stationary,  at  least  if  compared  with  the  increasing  transac- 
tions and  the  increasing  population,  and  that  it  did  not  enable 
the  Roman  men  of  business  to  conduct  their  operations  with 
that  continuously  small  increase  in  the  supply  of  the  precious 
metals  which  are  re(|uired  to  meet  the  increased  demands  of 
population  and  increasing  wealth." 

Alexander  Hamilton,  in  his  report  on  the  Mint  in  1792, 

said : 

"To  annul  the  use  of  either  of  the  two  metals  as  money  is 
to  abridge  the  quantity  of  circulating  medium,  and  is  liable  to 
all  the  objections  which  arise  from  a  comparison  of  the  benefits. 
of  a  full  with  the  evils  of  a  scant  circulation." 

I  make  no  apology,  in  view  of  the  importance  of  the 
question,  for  giving  some  quotations  I  find  grouped  in  a  very 
able  and  comprehensive  pamphlet  on  this  subject  by  Judge 
Robert  W.  Hughes,  of  Virginia.  He  quotes  M.  Edward 
Cazalet,  of  Milan,  a  distinguished  and  very  able  Italian  banker, 
who  says: 

"It  is  computed  that  the  total  metallic  circulation  of  the 
world  amounts  to  |7,OUO,<»00,000,  of  which  about  3,750,000,- 
000  are  gold,  and  3,250,000,000  are  silver. 

The  whole  of  tliis  mass  of  metal  is  now  doing  service  as 
currency,  and  to  demonetize  or  eliminate  either  metal  would 
involve  a  reduction  of  the  circulation  by  about  one-half.  The 
half  demonetized  would  be  incalculaby  depreciated  in  value ; 
the  half  which  remained  to  do  double  service  would  be  appre- 
ciated to  an  equal  extent.  Since  the  value  of  all  articles  of  com- 
merce is  represented  by  the  currency,  the  value  of  these  articles. 


PKICE  AND  ITS  DEPENDENCE  UPON  cf KP.ENCY.  85 

must  fall  in  proportion  to  tlie  reduction  in  tlie  volume  of  tlie 
currency,  otherwise  the  moneyed  currency  could  not  possiljly 
do  ihe  work  which  the  two  metals,  combined  had  previously 
performed.  Thus,  to  settle  a  debt  of  $100  it  would  be  neces- 
sary to  sell  merchandise  which  under  the  double  currency  had 
been  valued  at  $200.  The  creditor  would  gain  at  the  expense 
of  the  debtor.  *  *  *  As  the  currency  of  a  country  is  the 
only  legal  tender  which  can  ])e  offered  in  payment  of  a  debt, 
the  debtor  would  have  to  procure  that  curi'ency  from  a  circu- 
lation which  had  been  suddenly  contracted,  and  in  proportion 
to  this  contraction  the  debtor  would  be  a  loser  and  the  creditor 
a  gainer.  When  the  enormous  amount  of  international  and 
national  as  well  as  personal  indebtedness  is  cmisidered, 
and  when  we  ])ear  in  mind  that  this  indelitedness  would  be  well- 
nigh  doul)led  by  the  demonetization  of  either  gold  or  silver,  it 
becomes  clear  that  such  an  event  would  revolutionize  the  actual 
conditions  of  society,  and  be  nothing  short  of  a  universal  ca- 
lamity." (See  M.  Cazalet's  pamphlet  on  bimetallism,  pages 
14,  15.) 

Speaking  of  a  later  period,  the  historian  Allison  says : 

"If  this  circulating  medium  of  the  globe  had  remained 
stationary,  or  declining,  as  it  was  from  1815  to  1859,  from  the 
effects  of  South  American  revolution  and  English  legislation, 
the  necessary  result  must  have  l)een  that  it  would  have  become 
altogether  inadequate  to  the  wants  of  man  ;  and  not  only  would 
industry  have  been  everywhere  cramped,  but  the  price 
of  produce  would  have  universally  and  constantly  fallen. 
Money  would  every  day  have  become  more  valualjle ;  all  other 
articles  measured  in  money  less  so  ;  debt  and  taxes  would  have 
been  constantly  increasing  in  burden  and  oppression ;  the  fate 
which  crushed  Rome  in  ancient,  and  has  all  luit  crushed  Great 
Britain  in  modern,  times  would  have  beset  that  of  the  whole 
family  of  maiikind.  All  of  these  evils  have  l^een  entirely  ob- 
viated, and  the  opposite  blessings  introduced,  by  the  opening 
of  tlie  great  reserve  treasures  of  nature  in  California  and  Aus- 
tralia. *  *  *  Before  lialf  a  century  has  elapsed  the  prices 
of  every  article  will  l)e  tripled,  enterprise  proportionately  en- 
couraged, industry  vivified,  debts  and  taxes  lessened." 

Sir  Archibald  wrote  before  IS 73,  says  the  author. 

The  author  then  quotes  from  a  distinguished  German 
writer,  M.  Herr  von  Barr,  who,  after  showing  the  direct  loss  to 
Germany  from  the  depreciation  of  her  silver  coin,  and  the 


86  •         PHILOSOPHY  OF  PRICE. 

product  of  lier  silver  mines,  wliicli  he  places  at  an  enormous 
figure,  from  the  demonetization  of  silver,  says  : 

"This  direct  loss,  important  as  it  is,  is  nothing,  however, 
compared  with  the  indirect  loss  resulting  from  the  fall  of 
prices." 

Himself  a  large  land-owner,  he  first  speaks  of  agriculture : 

"It  is  cruelly  suffering  from  the  reduced  value  of  all  pro- 
duce. The  farmers  are  paying  their  rents  irregularly,  or  not 
at  all ;  their  stock  in  trade  lias  often  to  be  distrained  to  recover 
arrears  of  rent.  The  land-owners  are  overwlielmed  by  mort- 
gages. "When  at  last,  in  order  to  extricate  themselves,  they 
try  to  sell  their  estates,  they  find  no  purchasers,  or  have  to  be 
satisfied  with  a  price  one-third  Ijelow  former  estimates.  The 
discouragement  is  universal.  No  more  agricultural  improve- 
ments are  1  leing  effected ;  employment  is,  consequently,  lack- 
ing; and  there  is  great  indigence.  Hen«e  that  increasing 
emigration,  for  which  special  trains  and  steamers  have  to  be 
arranged.  It  is  a  verital)le  exodus.  What  remedy  for  so 
much  suffering  'i  The  agriculturists,  perceiving  at  length  the 
real  cause  of  the  evil,  demand  the  abandonment  of  the  gold 
standard.  *  *  *  The  fact  is  strange,  yet  certain,  that  from 
this  intense  crisis  has  sprung  that  odious  and  inexplicable  re- 
turn to  the  intolerance  of  the  Middle  Ages,  called  the  anti- 
semitic  movement,  the  Judenhetze  (Jew  hatred).  The  Jews, 
being  large  holders  of  the  gold,  whose  power  is  unduly  in- 
creased, are  regarded  by  the  populace  as  enriching  themselves 
by  the  ruin  of  others.  Tlie  capitalist,  unhurt,  even  profits  by 
the  clieapness  of  enforced  sales." 

The  awful  disaster  of  1847,  falling  like  a  thunder-clap 
from  a  clear  sky, — for  the  promise  had  been  that  nothing  of 
the  kind  could  ever  happen  under  the  patent  system  adopted 
in  1844, — caused  an  enormous  public  commotion  and  the  ap- 
pointment by  the  House  of  Lords  and  the  House  of  Commons 
of  a  "Secret  Connnittee"  to  make  a  solemn  investigation  into 
tlie  affairs  and  management  of  the  Bank.  From  a  vast  mass 
of  testimony  taken  before  this  "  Secret  Committee,"  I  quote 
the  following,  confining  myself  to  brief  extracts  taken  from 
the  testimony  of  the  chief  ofiicers  of  the  Bank  ;  whose  ahlUty 
and  knowltdge  to  testify  in  the  matter  is  beyond  tJie  pale  of 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  87 

cavil  or  didjpute.  The  following  is  a  portion  of  the  testimony 
given  by  Mr.John  II.  Pahner,  at  that  time  a  director,  and 
soon  after  made  Governor  of  the  Bank  of  Enofland : 

"It  is  by  producing  a  fall  in  the  value  of  commodities  in 
this  country  that  you  correct  the  exchanges  \  Auk.  Yes  ;  not 
merely  in  that  way,  but  you  wouM  bring  capital  into  the  coun- 
try by  a  high  rate  of  interest. 

It  is  by  interference  with  trade  that  it  acts^  and  not  merely 
by  the  inconveniences  of  the  bill-holders';!  Antt.  It  causes 
the  stoppage  of  ti-ade. 

What  would  be  the  efifect  upon  the  manufacturers  and  la- 
borers of  the  cr)untry  during  such  an  operation  'i  Ani<:.  It 
destroys  the  labor  of  the  country.  At  the  present  moment,  in 
the  neighborhood  of  London,  and  in  the  manufacturing  dis- 
tricts, you  can  hardly  move  in  any  direction  without  hearing 
universal  complaint  of  the  M^ant  of  employment  ])y  the  labor- 
ers of  the  country. 

That  you  ascribe  to  the  measures  it  was  neeemary  for  the 
Bank  to  adopt  in  order  to  preserve  the  (■onvertihUity  (specie 
payment)  of  its  notes '^  Avs.  I  think  the  present  depressed 
state  of  labor  is  erdirely  owing  to  that  eircumstance. 

And  the  pressure  of  the  Bank  produced  forced  sales? 
Ans.  It  stops  credit,  and  the  British  merchant  sells  his  goods 
for  the  purpose  of  meeting  his  private  payments,  and  brings 
his  capital  to  the  Bank  at  an  earlier  period  than  it  would  com.e 
in  the  ordinary  course  of  lousiness.  There  is  no  means  of  sup- 
plying the  Bank  with  gold,  excepting  only  the  diminution  of 
the  l>ank-notes,  which  immediately  contracts  the  currency,  and 
lowers  prices  by  increasing  the  value  of  money." 

The  following  is  a  portion  of  the  testimony  of  James 

Morris  and  Henry  J.  Prescott,  the  Governor  and  Deputy  Go^^- 

ernor  of  the  Bank  of  England,  before  the  "  Secret  Committee": 

"Is  there,  in  your  opinion,  any  mode  by  which  the  ten^ 
dency  to  an  efflux  of  the  precious  metals,  and  the  consequent 
diminution  of  the  circulating  medium,  can  be  arrested,  other 
than  that  of  such  a  reduction  of  prices  of  commodities  as  shall 
lead  to  export,  and  such  a  rise  in  the  A-alue  of  money  as  is  in- 
dicated by  the  advance  of  the  rate  of  interest '^  Ans.  No,  I 
think  there  is  no  other  method. 

'A  diminished  power  of  consumption  on  the  part  of 
the  public  would  have  been  rather  advantageous  to  the  system 


88  PHILOSOPHY     OF     PRICE. 

(coin)  of  circr.lation  ?  Arcs.  A  diminislied  circulation  would 
liave  checked  importation. 

Then  the  more  deprivation  the  public  was  subjected  to, 
the  safer  the  system  of  convertible  circulation  ?  Ans.  It  is 
necessary  sometimes  .  ...  in  order  to  restore  circulation  to 
a  proper  state. 

Was  it  the  intention  of  the  act  of  1844  (reor£;anization  of 
the  bank)  to  check  importations,  so  as  to  correct  tlie  unfavora- 
ble balance  of  trade?  Ans.  I  consider  the  act  of  1844  was 
to  cause  the  circulation  of  the  country  to  be  acted  upon,  by  the 
exports  and  imports,  in  the  same  way  as  the  currency  would 
have  been  acted  upon  liad  it  been  entirely  a  metallic  one. 

Then  there  having  been  an  export  of  gold  in  the  spring  of 
1847,  the  tendency  of  the  system  was  to  check  imports?  Ans. 
Inasmuch  as  the  export  of  a  certain  amount  of  bullion  would 
contract  the  circulation  of  the  country,  and  cause  a  fall  of 
prices,  it  would  tend  to  check  importation. 

Then,  in  1847,  when  there  was  a  great  deficiency  of  food, 
the  tendency  was  to  check  an  importation  of  food  ?  Ans.  The 
export  of  the  precious  metals,  by  reducing  the  circulation, 
tended  to  keep  down  the  prices  of  grain,  and  also  kept  down 
the  price  of  manufactures  which  miglit  be  exported  in  pay- 
ment. 

Do  you  think  this  system  of  circulation  should  be  pre- 
served at  any  cost  to  the  employment  of  the  people  ?  Ans.  I 
think  it  desirable  that  the  circulation  should  be  placed  on  such 
a  footing  that  it  should  expand  and  contract  in  the  same  way 
that  a  metallic  currency  would  do.     I  cannot  vary  from  that."" 

Mr.  Sealy,  of  England,  in  his  work  on  "  Coins  and  Cur- 
rency," published  at  London  in  1853,  holds  the  following  opin- 
ion of  the  Bank  of  England.  And  I  might  cpiote  an  entire 
volume  of  the  like  opinions  uttered  by  eminent  and  competent 
men.     Mr.  Sealy  says : 

"  The  commerce  of  the  country  is  now  in  the  power  of  the 
Bank  of  England,  as  it  was  before  in  the  legislature.  For  leg- 
islative enactment  we  have  substituted  the  decision  of  the  Bank 
Parlor ;  for  a  responsible  government,  composed  of  King, 
Queen,  Lords  and  Commons,  we  have  substituted  an  irrespon- 
sible body  composed  of  twenty-four  directors,  and  a  governor 
and  deputy  governor.  To  these  we  have  confided  the  com- 
rrierce  of  this  mighty  empire.  Instead  of  a  mercantile  system 
sn])ported  by  merchants  and  manufacturers  and  agricultural  in- 


PRICE  AND  ITS  DEPENDENCE  UPON  CURKKNCY.  89 

terests,  we  have  now  the  monetary  system  endangering  the 
welfare  of  merchants,  niannfaeturers  and  agricultural  inter- 
ests— for  the  l)eneiit  of  the  fund-holding  classes." 

Stephen  Williamson,  a  prominent  Liverpool  merchant,  in 

liis  pamphlet,   "  Bad  Trade  and  its  Causes,"  proves   beyond 

question  it  is  caused  by  a  want  of  currency.     He  says : 

"England  has  now  entered  upon  the  sixth  year  of  com- 
mercial and  manufacturing  distress  and  decadence.  There  is 
as  yet  not  a  single  ray  of  light  sliooting  up  through  the  dark 
mercantile  horizon.  A  crisis  without  parallel  in  the  experience 
of  the  present  generation  not  only  rests  upon  us,  Imt  intensi- 
fies as  time  rolls  on.  When  a  condition  of  affairs  baiilinaf  all 
experience  acquired  in  previous  times  of  prostration  exists,  it 
is  surely  our  paramount  duty  to  investigate  and  to  inquire 
whether  this  prolonged  distress  may  not  be  traced  in  large 
measure  to  some  special  or  peculiar  cause. 

My  object  in  writing  this  paper  is  to  call  attention  to  the 
serious  injury  inflicted  on  our  commerce  by  the  discrediting  of 
siher ;  and  my  contention  is,  that  the  practical  cutting  off  of 
silver  from  the  world's  monej  has  been  at  the  root  of  much  of 
our  distress  during  late  years,  and  is  now  one  of  the  chief  hin- 
drances to  the  retui-n  of  prosperity.  Undoulifedly,  our  declen- 
sion in  1873,  1874,  and  part  of  1875,  was  the  natural  revulsion 
from  undue  extension,  and  from  the  unduly  high  prices  paid 
for  labor  and  the  products  of  our  industry.  Since  1875  these 
causes,  however,  have  ceased  to  operate.  It  is  undoubtedly 
true  that  hostile  tariffs  and  the  competition  of  several  nations 
(particularly  the  United  States)  have  greatly  curtailed  the  de- 
mand for  our  manufactured  goods  which  previously  existed 
within  their  l)orders;  but  we  have  a  large  and  open  field  almost 
to  ourselves  in  many  quarters  of  the  glol)e  ;  and  the  lamentable 
fact  is,  that  in  these  regions,  peculiarly  our  own,  trade  contin- 
ues to  languish  as  it  does  elsewhere,  and  the  demand  for  our 
goods  is  greatly  restricted  and  diminished.  * 

It  will  not  be  questioned  that  the  large  increase  of  the 
world's  money,  due  to  the  Australian  and  ( -alif ornian  gold  dis- 
coveries, led  to  a  great  extension  of  the  world's  commerce. 
The  interchange  of  commodities  was  niarvelously  stimulated; 
labor  had  for  many  years  a  greatly  augmented  reconqjcnse  ;  the 
material  comfort  and  welfare  of  mankind  were  greatly  promo- 
ted ;  real  and  personal  property  increased  enormously  in  value 
all  over  the  civilized  world ;  the  foreign  commerce  of  England 


90  PHILOSOPHY    OF    PEICE. 

alone  rose  irom  £250,000,000  in  1852  to  £650,000,000  in  1875 ; 
the  foreign  commerce  of  many  other  nations  rose  in  like  pro- 
portion. From  the  surplus  gains  of  onr  commerce  in  those 
years,  we  invested  many  hundreds  of  millions  of  pounds  ster- 
ling in  state  and  corporation  bonds,  railways  and  industrial  en- 
terprises, and  in  property  and  mortgages  in  foreign  countries — 
leaving  us  innneasurably  wealthier  as  a  nation,  notwithstand- 
ing many  foolish  investments,  such  as  Turkish,  Peruvian  and 
Paraguayan  bonds.  It  is  difficult  to  believe  that  so  great  pros- 
perity and  increase  of  national  wealth  had  proceeded  from  a 
cause  apparently  so  inadequate  to  produce  results  so  fabulous. 
Such,  however,  was  in  large  measure  the  result  of  the  enlarged 
reservoir  of  the  world's  money  created  by  the  accession  of  gold 
from  the  Australian  and  Californian  mines.  It  acted  as  a  stream 
of  warm  blood  impelled  through  all  the  arteries  of  the  world's 
commerce,  vitally  and  powerfully  stimulating  the  vast  organ- 
isms of  trade  and  industry. 

"We  have  in  this,  our  late  national  experience,  a  direct  con- 
tradiction to  the  theories  of  some  political  economists  who 
assert  that,  after  all,  international  commerce  is  only  barter,  and 
that  money  has  little  or  nothing  to  do  with  its  extent  or  vol- 
ume. The  very  snuill  measure  of  truth  underlying  this  asser- 
tion has  led  many  intelligent  minds  astray.  It  is  because  the 
largely  increased  supply  of  money  had  guaranteed  to  men  and 
nations  the  payment  of  large  international  balances,  that  the 
volume  of  tlie  world's  trade,  prior  to  1874,  had  augmented 
with  such  marvelous  rapidity.  And  now  it  is  in  great  measure 
because  the  world  has  of  late  greatly  restricted  and  diminished 
the  capacity  of  its  money  reservoir,  that  distress  and  calamity 
augment  and  intensify  around  us.  A  large  portion  of  the  life- 
blood  of  commerce  has  been  artificially  congealed.  The  whole 
organism  has  felt  the  shock ;  but  the  financ'ial  intellect  has  be- 
come so  beclouded  and  benuml)ed  as  nut  to  have  fully  realized, 
even  yet,  tlie  cause  of  the  deadening  paralysis  which  has  over- 
taken it.    . 

Let  us  present  for  consideration  the  diagnosis :  The  world, 
.of  late  years,  traded  on  an  etfective  metallic  capital  estimated 
at  £1,400,000,000.  Of  this,  we  have  good  evidence  for  believ- 
ing that  about 

£750,000,000  were  gold  coins  and  bullion, 
and     ^         £650,000,000     "      silver  coins  and  bullion. 

Now,  we  assert  tliat  the  world,  of  late,  has  been  commit- 
ting the  suicidal  act  of  discarding,  discrediting  and  cutting  off 


PEICE  AND  ITS  DEPENDENCE  UPON  CUEKENCY.  91 

from  performing  its  wonted  functions  one  of  the  two  agents  or 
solvents  for  tiie  liquidation  of  balances  of  international  indebt- 
edness. In  other  words,  the  world,  acting  under  the  legal  in- 
junctions of  the  leading  monetary  powers,  has  divorced  from 
its  monetary  system  that  silver  which,  from  time  immemorial, 
has,  conjointly  with  gold,  formed  its  'money.'  Widespread 
suffering  has  been  the  inevitable  result  of  its  folly. 

Our  unwise  legislation  of  1816,  which  made  gold  sole 
legal  tender  in  England,  has  been  the  underlying  cause  of  all 
this  evil.  For  years  we  played  upon  the  currencies  of  Europe, 
and  often  swept  away  large  quantities  of  silver  for  transmission 
to  India,where,  with  an  admirable  contradiction  in  our  monetary 
legislation,  we  have  enforced  a  silver  currency.  "While  availing 
ourselves  of  the  stores  of  silver  belonging  to  our  continental 
neighbors,  we  constantly  vaunted  about  the  superiority  of  our 
gold  currency,  and  stimulated  them  to  follow  our  short-sighted 
example.  Even  a  Liberal  Chancellor  of  the  Exchequer  (Mr. 
Lowe)  boasted  in  full  Parliament,  in  the  year  1869,  that  he  had 
made  a  convert  of  France.  Germany,  however,  stole  a  march 
on  France  in  the  insane  career  which  we  had  pointed  out  to 
them  as  the  high  road  to  success,  and  in  1874  decreed  the  de- 
monetization of  silver  and  its  substitution  by  gold.  France, 
which  had,  in  conjunction  with  the  states  of  the  Latin  L^nion, 
provided  for  the  world  an  equilibrium  or  par  of  exchange  be- 
tween the  two  metals,  by  means  of  her  free-mintage  system 
and  making  both  metals  full  legal  tender  on  the  ratio  of  15  1-2 
of  silver  to  1  of  gold,  thereupon  suspended  the  free  coinage  of 
silver,  France  was  driven  to  this  act  by  the  unwise  monetary 
legislation  of  powerful  neighbors.  The  pai*  of  exchange  pro- 
vided betwixt  gold  and  silver  money  was  thereby  lost  to  the 
world.  Silver  was  dethroned.  "War  to  the  knife  was  declared 
against  that  metal.     Grold  now  reigns  supreme  and  onmipotent. 

The  results  have  been  disastrous  in  the  extreme.  The 
hard  money  capital  of  the  world  has  been  practically  reduced 
from  £1,400,000,000  to  £8oO,000,000,  and  yet  men"  are  at  a 
loss  to  account  for  the  greatly  reduced  interchange  of  conmiodi- 
ties,  and  the  greatly  reduced  prices  now  paid  for  property,  for 
goods  and  for  labor ! " 

Let  us  turn  to  the  words  of  wisdom  uttered  by  the  late 
Mr.  Ernest  Seyd,  one  of  the  most  able  and  reliable  statisticians 
and  Unanciers  of  Great  Britain.  He  was  the  author  of  a  very 
able  and  exhaustive  book,  advocating  the  restoration  of  the 


92  PHILOSOPHY     C?     rP.TCE. 

double  standard  to  Great  Britain,  and  iu;  ^ Sorts  are  said  to 
have  produced  a  profound  impression  on  his  conservative  coun- 
trymen. But  financial  disasters  or  events  have  done  more  in 
this  direction  than  the  able  arguments  of  Mr.  Seyd.  In  1867, 
this  far-sighted  and  clear-headed  financier,  in  discussing  this 
question,  that  was  then  exciting  considerable  interest,  expressed 
himself  very  freely  on  the  evils  that  would  probably  fall  on  the 
world,  in  an  attempt  to  discard  silver  as  a  full  legal  tender 
money  metal.     He  said : 

"  Throughout  the  world  a  fall  in  prices  will  take  place, 
injurious  alike  to  tlie  owners  of  solid  property  and  to  the  labor- 
ing classes,  and  advantageous  only,  and  unjustifiably  so,  to  the 
holders  of  state  debts  and  other  contracts  of  that  kind." 

He  also  said,  that  when  these  results  followed  the  discard- 
ing of  silver,  all  sorts  of  reasons  would  be  brought  forward 
to  account  for  the  distress,  and  thus  the  real  cause  would  be 
neglected  until  this  distress  compelled  thinking  men  to  refer  it 
to  the  legitimate  cause. 

Blake,  in  his  report  on  the  precious  metals,  page  235.  said : 

"With  this  continued  decrease  in  the  annual  production, 
it  seems  prolmble  that  gold  will  soon  begin  to  sensil)ly  appre- 
ciate in  value,  unless  some  ]iew  and  unlooked  for  discovery  of 
placers  shall  ])e  made,  of  which,  however,  there  does  not  appear 
to  be  much  pro])ability. 

It  was  argued  l)y  Chevalier  and  others  soon  after  the  great 
discoveries  in  Australia  and  California,  that  sold  would  neces- 
sarily  depreciate  in  value ;  that  its  purchasing  power  was  des- 
tined to  be  much  lessened  l>y  the  great  influx  of  the  metal 
from  these  new  sources.  But  the  relative  value  of  gold  has 
not  changed  as  much  as  was  expected,  and  it  would  now  seem 
that  the  supj)ly  did  not  more  than  keep  pace  with  the  ever  in- 
creasing demands  of  commerce  and  industry,  stimulated  as 
tliey  have  been  l)y  an  increasing  supply  of  gold.  The  wonder- 
ful increase  of  the  industrial  activity  of  the  world,  resulting 
chiufiy  from  the  varied  developments  and  application  of  the 
physical  sciences,  has  been  sufficient  to  appropriate  all  the  ex- 
cessive production  of  the  past  twenty  years." 

North  American  Review : 


PKICE  AND  ITS  DEPENDENCE  UPON  CrRKENCY.  93 

"A  glut  of  loanable  capital  and  low  rates  of  interest  are 
the  inevitable  final  accompaniments  of  a  shrinking  money  vol- 
ume and  the  consequent  decline  in  market  values,"  , 

Sir  Robert  Peel  in  his  great  speech  of  May  6  and  20, 1S44, 

on  the  British  act  regulating  the  issue  of  currency,  said : 

"There  is  no  contract,  public  or  private ;  no  engagement, 
national  or  individual,  which  is  unaffected  by  it.  The  enter- 
prises of  commerce,  the  profits  of  trade,  the  arrangements 
made  in  all  the  domestic  relations  of  society,  the  wages  of 
labor,  pecuniary  transactions  of  the  highest  amount  and  of  the 
lowest,  the  payment  of  the  national  debt,  the  provision  for  the 
national  expenditure,  the  command  which  the  coin  of  the 
smallest  denomination  has  over  the  necessaries  of  life,  are  all 
affected  by  the  decision  to  which  we  may  come  on  that  great 
question  which  I  am  about  to  submit  to  the  consideration  of 
the  committee." 

A  contraction  of  the  money  volume  changes  the  relations 

between  money  and  other  things,  and  necessarily  affects  prices. 

John  Locke  long  ago  laid  down  the  true  law  relating  to  the 

value  of  money,  as  follows  :■ 

"Money,  while  the  same  quantity  of  it  is  passing  up  and 
down  the  kingdom  in  trade,  is  really  a  standing  measure  of  the 
falling  and  rising  value  of  other  things  in  reference  to  one  an- 
other, and  the  alteration  in  price  is  truly  in  them  only.  But  if 
you  increase  or  lessen  the  quantity  of  money  current  in  traflic 
in  any  place,  then  the  alteration  of  value  is  in  the  money." 

That  is,  with  a  stable  volume  of  money  for  a  given  popu- 
lation M'ith  given  wealth,  which  determines  the  volume  of 
business,  variation  in  the  price  of  commodities  is  a  variation  in 
the  goods  themselves  as  compared  one  thing  with  another ;  but 
when  the  volume  of  money  is  changed,  then  the  measure  itself 
is  changed,  and  we  have  what  is  taking  place  now,  a  double 
effect — that  is,  both  a  change  in  the  commodities  under  the 
law  of  supply  and  demand,  as  above  stated,  and  a  change  in 
the  measure  itself  affecting  the  price  of  everything.  In  fact, 
it  is  an  admitted  doctrine  of  political  economy  that  there  can 
not  be  a  general  rise  or  a  general  fall  of  prices  except  by  a 
change  in  the  value  of  money.     A  general  fall  or  a  generai 


94  PHILOSOPHY  ""OK 

rise  of  prices,  when  properly  nnderstuo^.,  leans  simply  that 
there  has  been  a  change  in  the  measure  itself. 

I  might  continue  references  almost  indetiniitely,  but  the 
number  given  and  the  eminent  sources  from  which  they  are 
derived  ought  to  convince  the  most  sceptical. 

When  a  proposition  of  this  magnitude  has  received  the 
careful  consideration  of  so  many  persons,  distinguished  alike 
for  their  honesty  and  ability,  whose  conclusions  are  almost  a 
unit  as  to  its  truthfulness,  there  is  no  good  reason  why  we 
should  not  accept  them  as  final.  When  this  is  done  our  future 
action  regarding  the  correction  or  encouragement  of  the  pres- 
ent condition  of  affairs  becomes  a  sin  of  commission  instead  of 
omission.  We  act  ^vith  a  full  knowledge  of  the  facts 
})efore  us. 

In    describing    the    effects   of   contraction    <luring   Yan 

Buren's  administration,  Henry  Clay  said : 

""What  our  present  situation  is,  is  as  needless  to  describe 
as  it  is  painful  to  contemplate.  First  felt  in  our  great  commer- 
cial centers,  disasters  and  embarrassment  have  penetrated  into 
the  interior  and  at  the  present  time  rest  like  a  black  cloud 
over  the  whole  nation." 

It  has  been  justly  said  by  one  of  the  soundest  and  most 

practical  writers  that  I  have  ever  read,  that : 

"All  convulsions  in  the  circulation  of  money  and  in  the 
commerce  of  any  country  must  originate  in  the  operations  of 
the  government,  or  in  the  mistaken  views  and  erroneous  meas- 
ures of  those  possessing  the  power  of  influencing  credit  and 
circulation,  for  they  are  not  otherwise  susceptible  of  convul- 
sion, and  if  left  to  themselves  they  will  find  their  own  level 
and  flow  nearly  in  one  uniform  direction." 

Our  condition  is  the  same  to-day  as  has  many  times  oc- 
curred in  the  history  of  the  past,  and  has  *l)een  brought  about 
by  the  same  causes.  Our  currency  has  been  steadily  contracted 
for  many  years,  and  during  all  that  time  with  but  an  occasional  ^ 
breathing  spell,  business  has  been  drooping  and  values  have 
fallen.     We  have  been  tricked,  as  other  nations  have  been,  into 


PKI-CE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  95 

placing  our  national  honor  into  our  national  credit.  We  have 
been  induced — or  seduced — to  believe  that  our  honor  as  a  peo- 
ple consisted  in  paying  our  national  l)onds  in  gold,  one  hun- 
dred cents  on  the  dollar,  which  were  bought  with  greenl^acks 
at  par,  worth  onlj  fifty-five  cents  in  gold ;  and  by  so  doing 
we  have  brouglit  business  stagnation,  and  continued  financial 
disaster,  from  year  to  year,  upon  a  confiding  people. 

Why  should  United  States  bonds,  bearing  4  per  cent,  in- 
terest, be  worth  one  hundred  and  twenty-seven  cents  on  the 
dollar  while  good  farms  cannot  be  mortgaged  for  over  one- 
third  of  their  value  at  7  per  cent,  interest  \  Why  is  it  that 
bonds  go  up,  and  all  products  of  labor,  and  labor  itself,  goes 
down  ?     Is  that  ^Jrosperity  ? 

What  labor  and  products  lose  in  value  finds  a  lodgment 
in  the  bonds  and  mortgaojes  held  ag^ainst  this  same  labor  and  its 
products,  and  all  the  vantage  ground  forced  from  labor  and 
appropriated  by  capital,  is  really  a  loss  to  society  and  the  na- 
tion, and  weakens  the  government  instead  of  giving  it  strength. 
The  point  made  by  Solon  Chase  is  not  only  sound  in  logic  but 
tnie  in  fact.     He  said : 

"I  bought  a  yoke  of  steers  a  year  ago  for  sixty  dollars,  fed 
them  all  summer  and  winter,  and  in  the  spring  was  offered  but 
sixty  dollars  for  them  in  the  market.     ]N"ow,  who  got  the  hay  ?" 

What  was  true  in  the  case  of  "them  steers"  is  true  of 
every  class  of  property  in  this  country.  Xow  the  question  is, 
who  gets  this  lost  value  ?  It  finds  a  lodgment  somewhere ;  that 
place  must  be  with  money.  For,  wherever  that  may  be  found 
it  will  show  an  increase  in  value  over  products  and  labor  in 
proportion  as  products  and  labor  have  decreased.  Nothing  is 
plainer  than  this. 

The  mistake  is  often  made,  that  prices  are  not  controlled 
by  the  volume  of  money,  l^ecause  they  have  neither  risen  nor 
fallen  concurrently  with,  nor  in  exact  proportion  to  the  increase 
or  decrease  of  such  volume.  The  precious  metals  are  diffused 
over  so  vast  a  surface,  and  their  current  production  is  so  small 


96  PHILOSOPHY  OF  PEICE. 

in  comparison  witli  accunrjlated  stocks  that  it  takes  considera- 
ble time  for  changes  in  tlieir  yield  to  sp  afiEect  their  volume 
relatively  to  population  and  business  as  to  produce  any  sensible 
effect  upon  prices.  The  entire  property  interests  of  a  country 
are  united  in  maintaining  and,  if  possible,  in  advancing  the 
price  of  property,  and  in  resisting  to  the  uttermost  any  de- 
chne.  A  temporary  maintenance  of  nominal  prices,  even  in 
the  presence  of  a  shrinking  volume  of  money,  is  especially 
practicable  with  imperishable  property,  such  as  real  estate. 
When  money  begins  to  become  scarce  by  reason  of  a  shrinkage 
in  its  volume,  the  first  effect  upon  real  estate  is  found  to  be, 
not  a  dechne  of  its  nominal  price,  but  a  diminution  in  the 
number  of'  transactions.  Market  reports  quote  real  estate 
"  dull^''  ''^few  sales,  hut  prwes  firing  This  stagnation  is  as- 
cribed to  temporary  causes,  and  a  speedy  recovery  predicted. 
In  order  to  maintain  price,  the  terms  of  purchase  are  made 
easier.  The  amount  of  cash  payments  is  reduced,  and  the  de- 
ferred payments,  secured  by  mortgage  on  the  property,  extend- 
ed over  longer  ]3eriods.  After  a  time  this  expedient  fails,  and, 
even  then,  nominal  prices  are  unnaturally  held  up  for  a  short 
period  by  the  struggles  of  those  who  have  purchased  upon 
these  extended  credits,  and  by  the  tenacity  of  owners  who  re- 
fuse to  sell  at  lower  figures,  and  mortgage  their  own  property 
to  protect  their  power  to  hold.  The  stagnation  of  voluntary 
transactions  is  finally  followed  by  the  activity  of  involuntary 
ones  under  the  direction  of  sheriffs  and  by  the  foreclosure  of 
mortgages. 

Upon  any  material  decline  in  the  price  of  real  estate,  a 
large  class  of  investors,  believing  that  the  bottom  has  been 
reached,  and  desiring  to  profit  by  the  reaction  which  they  think 
is  sure  to  come  speedily,  enter  the  market  and  temporarily 
check  the  decline.  Another  fall  in  prices  sweeps  them  and 
their  margins  away,  and  a  third  class  of  dealers,  now  absolutely 
certain  that  bottom  prices  have  been  reached,  and  sure  that  a 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  97 

furtLer  decline  is  impossi1)Ie,  come  in  as  purchasers.  Each 
succeeding  purchaser  fortifies  his  conchision,  that  present  prices 
are  bottom  prices,  by  comparing  them  with  and  finding  that 
they  are  no  higher  than  the  prices  of  some  period  in  the  past 
which  is  arbitrarily  assumed  to  be  a  standard  level,  below  which 
subsequent  prices  could  never  permanently  go. 

It  is  overlooked  that  price  is  only  the  expression  of  a  rela- 
tion, and  that  no  correct  conclusions  can  be  drawn  from  a  com- 
parison of  the  prices  of  two  periods,  unless  comparison  be  also 
made  of  the  money  stock,  population,  and  exchanges  of  both 
periods.  Contrary  to  all  calculations,  as  the  voknne  of  money 
shrinks,  prices  continue  to  fall,  and  these  dealers  encounter  the 
fate  of  their  predecessors.  These  operations  repeat  themselves 
until  universal  distrust  prevails,  and  until  it  is  found  that, 
when  money  is  decreasing  in  volume,  prices  have  no  bottom 
except  a  receding  one,  and  that  they  are  inexorably  ruled  by 
the  volume  of  money.  The  effects  of  a  decrease  of  the  vol- 
ume of  money  in  a  particular  country,  arising  from  its  abnor- 
m.al  outflow,  or  from  its  withdrawal  from  the  channels  of  cir- 
culation through  the  distrust  which  prevails  when  unsound 
and  sjjeculative  undertakings  are  breaking  down,  or  when  the 
country  is  convuised  by  political  disturbances,  are  the  same  as 
the  efiects  of  a  general  decrease  in  the  volume  of  money.  The 
result  in  both  cases  is  a  fall  in  prices.  But  in  the  first  case  the 
equilibrium  is  restored  by  a  quickly  returning  wave  of  prosper- 
ity, and  the  evils  resulting  are  confined  to  individuals  and  to 
special  localities  ;  and  those  dealers  are  fortunate  who  purchase 
in  the  first  stashes  of  the  decline.  But  in  the  second  case  the 
cause  of  the  fall  in  prices  is  radical,  and  must  continue  until 
prices  go  out  of  existence,  unless  the  decrease  in  the  volume  of 
money  is  arrested.  In  the  whole  history  of  the  world  every 
great  and  general  fall  of  prices  has  been  preceded  by  a  decrexse 
in  the  volume  of  money.  Tliere  has  never  been  a  decrease  in 
the  volume  of  money,  nor  has  there  ever  been  a  stationary  vol- 


98  PHILOSOPHY     OF     PKICE. 

■ume  of  money,  unless  accompanied  by  a  stationary  population, 
and  commerce,  which  has  not  sooner  or  later  resulted  in  a  gen- 
eral fall  of  prices ;  and  there  has  never  been  a  recovery  there- 
from except  through  a  preceding  increase  in  the  volume  of 
money.  After  the  volume  of  money  has  begun  to  decrease, 
every  dollar  of  credit  extended  at  the  old  range  of  prices  ag. 
gravates  the  disaster  which  must  come  sooner  or  later.  Stag- 
nation and  panic  are  nothing  more  nor  less  than  the  results  of 
a  struggle  to  m.ake  prices  truly  express  the  relation  between 
money  and  all  other  exchangeable  things. 

The  true  and  only  cause  of  the  stagnation  in  industry  and 
commerce  now  everywhere  felt  is  the  fact  everywhere  existing 
of  falling  prices  caused  by  a  shrinkage  in  the  volume  of  money. 
This  is,  in  part,  the  misfortune  of  mankind,  as  the  mines  have 
failed  for  several  years,  under  energetic  working,  to  yield  the 
precious  metals  in  quantities  sufficient  to  keep  pace  with  the 
increasing  needs  of  the  world  for  m.oney.  But  it  is  in  part 
due  to  the  folly  of  mankind  in  throwing  away  a  benefaction  of 
nature  by  discarding  one  of  the  precious  metals.  Existing 
evils  date  with  that  folly,  which  precipitated  and  now  enor- 
mously aggravates  them. 

Many  learned  and  excellent  persons  and  associations  of 
persons  in  all  pai-ts  of  the  world,  whose  instruments  of  obser- 
vation seem  to  have  been  adjusted  for  the  examination  of  re- 
mote objects,  and  consequently,  unfitted  for,  and  a  hindrance 
to  the  inspection  and  examination  of  anything  near  at  hand, 
have  furnished  many  far-fetched,  incomprehensible  and  impos- 
sible causes  for  existing  evils,  which  agree  in  nothing  except 
their  remoteness.  They  have  seen  through  a  glass  darkly,  or 
they  would  have  discovered  that  the  cause  was  all  around  and 
about  them ;  that  it  is  the  same  cause  that  has  invariably  pre- 
ceded and  accompanied  similar  evils.  They  would  have  seen 
tJiat  money  in  shrinking  volum.e  was  engaged  in  its  legitimate 
work  of  ruin.     Tliis  is  ihe  great  cause.     All  others  are  collate 


PRICE  AND  ITS  DEPENDEKCE  UPON  CURRENCY.  99 

«ral,  cumulative,  or  really  the  effects  of  that  primal  cause. 
Practical  men  see  what  the  mischief  is,  and  they  all  see  it  alike, 
and,  without  formulating  their  ideas  in  set  words  and  phrases, 
they  t([\  state  it  alike.  Capitalists,  large  and  small,  give  one 
and  only  one  reason,  for  refusing  to  invest  in  productive  enter- 
prises. Uniformly  and  universally  the  reason  given  is  that 
prices  are  falling  and  may  continue  to  fall,  and  that  money  is 
the  best  thing  to  get  and  hold  while  that  state  of  things  con- 
tinues. All  can  see  that  prices  have  fallen  and  are  falling, 
although  they  may  disagree,  or  may  not  trouble  themselves  to 
form  any  opinion  as  to  the  cause  of  the  fall.  And  all  can  see, 
and  do  see,  that  it  is  falling  prices  which  cause  the  stagnation 
of  business,  with  all  its  necessarily  attendant  circumstances  of 
an  increasing  pressure  of  debts,  of  decreasing  employment  and 
wages  of  labor,  and  of  diminishing  consumption.  ''Falling 
prices"  is  only  another  expression  for  an  increasing  value  of 
money,  and  those  wiio  desire  still  further  to  appreciate  tlie 
value  of  money  by  contracting  its  volume,  desire  still  further 
to  reduce  prices,  and  still  further  to  widen  and  deepen  the  gulf 
between  money-capital  and  labor. 

M«ney-capital  is  the  fund  out  of  w^liich  wages  are  paid. 
Capit&l  can  only  fructify  through  the  employment  of  labor, 
and  labor  is  comparatively  helpless  without  capital.  It  is  ])j 
the  employment  of  labor  that  money-capital  is  produced  and 
increased.  It  is  in  vain  to  advise  those  who  depend  upon  their 
daily  wages  for  their  support,  and  who  possess  no  capital  Init 
their  willing  hands,  to  change  their  places  of  residence  and  en- 
gage in  agricultural  pursuits.  Even  had  they  the  means  to 
emigrate,  which  most  of  them  have  not,  they  would  still  have 
to  be  supplied  with  seed,  implements,  and  animals,  and  with 
Bupport  from  seed-time  to  harvest.  It  is  still  more  plainly  fu- 
tile to  advise  them  to  engage  in  any  species  of  handicraft  or 
manufacture  on  their  own  account. 

In  modern  times  human  labor  is  only  available  in  connec- 


100  PHILOSOPHY    OF  PEICE. 

tion  with  machinery  and  apphances,  A  poHcy  which  tends  to 
a  constant  fall  of  prices,  and  therefore  compels  capital  from  the 
justifiable  instinct  of  self-preservation  to  withdraw  from  pro- 
duction, is  a  policy  which  reduces  laborers  to  a  worse  condi- 
tion than  if  money  were  wholly  abandoned  and  the  system  of 
barter  were  re-established.  The  conditions  of  the  laborer  are 
as  bad  when  money-capital  is  not  employed,  as  if  it  did  not 
exist.  The  effect  of  falling  prices  is  the  same  upon  the  small- 
est capitalist  as  upon  the  largest.  The  hope  of  gain  is  for  all 
of  them  the  only  inducement  to  take  the  risks  and  labor  of 
enterprises,  and  they  will  all  prefer  to  consume  their  accumu- 
lations rather  than  to  invest  with  the  certainty  of  losing  them. 
They  will,  of  course,  consume  them  as  slowly  as  possible,  and 
to  that  end  will  reduce  their  expenditures  within  the  smallest 
possible  limits.  Laborers  thrown  out  of  employment  must  in 
some  way  have  a  bare  subsistence,  Init  there  can  be  no  other 
sources  for  it  than  the  scanty  earnings  of  such  as  are  employed, 
and  the  capital  in  existence,  which  cannot  refuse  food  to  the 
starving. 

That  shrinking  money  and  falling  prices  are  the  cause  of 
existing  evils,  was  pointed  out  by  the  London  Economist  in  its 
review  (1869)  of  the  previous  financial  year.     It  then  said; 

"It  may  be  safely  affirmed  that  the  present  annual  supply 
of  thirty  millions  sterling  of  gold  is  no  more  than  sufficient  to 
meet  the  requirements  of  the  expanding  commerce  of  the 
world,  and  prevent  that  pressure  of  transactions  and  commodi- 
ties on  the  ])recious  metals  which  means,  in  practice,  prices 
and  wages  cmistantly  Und'mg  towai'd^  decline.  Tlie  real  dan- 
ger is  tliat  tlie  present  supplies  should  fall  off,  and  among  the 
greatest  and  most  salutary  events  that  could  now  occur  would 
be  the  (b'scovery  of  rich  gold  de])0sits  in  three  or  four  remote 
and  ncgle(;ted  regions  of  the  earth." 

Having  shown  by  the  testimony  of  the  ablest  writers  for 

long  years  in  the  past,  together  with  the  experiences  of  all 

nations,  as  far  back  as  economic  writings  extend,  also  by  the 

best  of  our  own  statesmen  and  our  own  national  experience  that 


PRICE  AND  ITS  DEPENDENCE  UPON  CURRENCY.  ](ll 

price  depends  upon  the  circulating  medium,  and  that  the  cir- 
culating medium  makes  the  ability  to  ]3urchase,  it  now  devolves 
the  more  difficult  task  of  expressing  clearly  how  it  is  done. 
We  see  and  know  that  a  blade  of  grass  grows  and  extends  with 
each  successive  day's  sun,  but  how  it  grows  has  never,  in  a  suc- 
cessful manner,  been  explained.  If  my  readers  will  follow  me 
closely  I  will  give  my  reasons  in  as  intelligible  a  manner  as 
possible  for  the  conclusions  above  stated.  Money  is  the  meas- 
ure of  values.  That  must  be  an  admitted  fact  at  the  outset. 
This  being  true,  all  values  must  be  determined  by  its  measure- 
ment. As  a  nation  we  have  selected  the  dollar  to  be  our  unit 
of  value.  Hence  all  values  are  either  multiples  or  divisions 
of  that  unit,  the  dollar.  It  therefore  follows  that  the  less  value 
the  unit  or  dollar  represents  the  greater  riuTuber  of  units  or 
dollars  a  given  amount  of  value  will  possess.  For  example, 
3600  pounds  of  wheat  will  show  sixty  bushels  of  wheat  with 
the  unit  or  bushel  representing  sixty  pounds,  but  change  that 
unit  or  bushel  to  represent  but  thirty  pounds  and  it  will  in- 
crease the  measurement  to  120  bushels.  Increase  the  unit  or 
bushel  to  ninety  pounds  and  it  will  slirink  the  measurement  to 
40  bushels.  In  fact,  the  value  represented  by  the  dollar  i-s  al- 
wavs  the  divisor,  the  amount  of  values  under  consideration  the 
dividend,  and  the  numher  of  values  the  quotient.  From  this 
it  is  plain  that  the  size  of  the  divisor  determines  the  size  of  the 
quotient  provided  the  dividend  is  always  the  same,  which  it  is 
in  this  illustration.  Let  us  represent  all  labor  productions 
as  the  dividend,  being  the  whole  sum  of  produced  values. 
When  we  come  to  reduce  this  amount  to  the  unit  or  dollar  of 
va)lue,  does  it  not  follow  that  the  more  value  the  unit  or  dollar 
possesses  the  less  number  of  units  or  dollars  the  quotient  will 
give  ?  But  to  show  more  plainly  my  proposition,  let  bs  again 
suppose  the  whole  production  of  values  for  the  year  is  repre- 
sented by  a  space  of  1,000  feet  cubic  measure,  that  is  1,000 
feet  long  by  one  foot  in  depth  and  breath.     If  we  had  1,000 


102  PHILOSOPHY     OF     PRICE. 

measures  one  foot  deep,  one  foot  wide,  and  one  foot  in  lengtli, 
they  would  exactly  fill  up  the  1,000  cubit  feet  of  space.  Now 
if  each  space  or  cubic  foot  represented  productive  value  to  the 
amount  of  one  dollar,  the  proposition  will  be  stated  comj^lete. 
When  the  people  brought  their  products  to  be  measured,  those 
who  filled  ten  measures  would  have  ten  dollars  in  value ;  those 
who  filled  100  measures  v.'ould  have  100  dollars  in  value ;  and 
so  on  until  the  whole  product  had  been  measured.  If  the 
me;isures  remained  the  same  in  capacity,  producers  could  calcu- 
late exactly  upon  the  value  of  their  productions.  But  suppose 
these  measures  should  be  increased  in  number  100  per  cent, 
(bear  in  mind  the  space  or  volume  of  products  remains  the  same), 
then  the  measure  would  be  increased  in  number  to  2,000,  and 
their  capacity  for  measurement  would  be  decreased  one-half. 
Now  the  measures  would  contain  but  one-half  of  a  cubic  foot, 
and  when  the  producer  brings  his  products  for  measurement 
as  before,  he  finds  that  instead  of  filling  ten  measures  as  at 
first  he  can  fill  twenty.  The  other  can  fill  200  measures.  The 
result  is,  that  while  they  received  ten,  or  one  hundred  dollars 
before,  they  now  receive  twenty,  or  two  hundred  dollars  as  the 
case  may  be.  But,  suppose  the  number  of  measures  is  dimin- 
ished to  500,  then,  in  order  to  fill  up  the  space,  which  includes 
the  entire  volume  of  products,  their  capacity  must  ])e  doubled. 
They  must  now  ])e  tA\'o  feet  long,  one  foot  deep,  and  one  foot 
in  widtli.  The  producers  come  for  measurement  as  before  and 
find  that  on  account  of  the  increased  size  of  the  measure  tliey 
can  only  fill  five  and  fifty  measures  respectively,  and  as  a  con- 
sequence one  receives  five  and  the  other  l)ut  fifty  dollars.  If 
we  represent  the  period  of  our  ])usiness  year  by  the  1,000  feet 
of  cubic  space,  the  measures  which  fill  that  space  l)y  our  circu- 
latinif  medium,  and  our  whole  volume  of  Droduction  from  bu&- 
iiiess  ])y  the  products,  v/e  then  have  this  illustration  applied  to 
the  increa.se  or  decrease  of  the  value  in  the  unit  or  dollar  of 
our  measurement  of  vahies,  and  showinar  its  resulting;  effects — 


PRICE  AND  ITS  DEPENDENCE   UPON  CURRENCY.  103 

all  of  which  goes  to  prove  the  truth  of  this  statement :  the 
cheaper  the  dolhir  the  more  dollars ;  the  dearer  the  dollar  the 
less  dollars. 

We  see  from  this  conclusion  that  the  man  who  owns  the 
dollar  is  intei-ested  in  having  its  value  increased  to  the  utmost 
extent,  while  the  man  who  accumulates  products  to  purchase 
these  dollars  is  interested  in  having  their  value  reduced  so  that 
he  may  obtain  a  larger  number  of  them  for  a  given  amount  of 
his  products.  This  being  true  the  right  action  in  the  case 
would  be  equal  justice  to  both.  The  laws  of  every  Repub- 
lic, espeeially  of  ours,  are  founded  upon  the  principle  of  "  the 
greatest  good  to  the  greatest  number."  In  this  principle  the 
fact  is  recognized  that  the  samxC  law  wnll  not,  in  its  application, 
inure  to  the  benefit  of  all  ;  that  some  must  suffer  through  its 
working ;  but  if  it  is  for  the  interest  of  the  majority  the  mi- 
nority must  acquiesce. 

Now,  in  this  nation,  a  very  large  majority  of  the  popula- 
tion are  poor.  They  are  people  whose  only  capital  is  invisible, 
and  whose  means  of  support  is  through  labor.  Again,  where 
one  person  is  found  free  of  debt,  thirty-three  are  discovered  to 
be  involved.  "Where  three  persons  are  comfortably  fed, 
housed,  and  clothed  without  labor,  ninety-seven  are  in  reduced 
circumstances.  The  census  returns  show  the  startling  fact  that 
the  average  of  wealth  in  this  nation  is  but  a  tritle  over  three 
hundred  dollars  per  capita.  Imagine  the  number  of  paupers 
to  offset  the  wealth  of  Vanderbilt. 

Then,  is  it  not  true,  that  our  economic  laws  should  be  so 
framed  as  to  aid  the  poor  as  against  the  unjust  encroachm.ents 
of  the  rich  ?  Do  not  the  poor  of  this  land  come  directly  under 
the  application  of  the  foregoing  principles  ?  Some  will  say  the 
rich  will  take  care  of  the  poor.  As  well  might  we  expect  tlie 
wolf  to  rear  the  young  lambs.  Not  one  man  in  a  thousand 
who  becomes  wealthy,  after  having  tasted  the  bitter  fruits  of 
poverty,  but  forgets  that  he  was  ever  poor  and  becomes  the 


104  PHILOSOPHY     OF     PRICE. 

worst  eneiiij  of  the  unfortunate,  and  those  "who  inherit  great 
wealth  inherit  with  it  a  contempt  for  the  laboring  classes. 
Such  is  the  contaminating  influence  of  money. 

The  only  manner  by  which  the  general  good  of  the  public 
can  he  subserved  is  through  the  honest  application  of  whole- 
some general  laws  rigidly  enforced.  This  is  due  to  the  people 
and  this  thev  have  a  rioht  to  expect. 

In  concluding  this  chapter  I  quote  from  a  late  writer  as 
follows : 

"The  scheme  of  demonetizino:  one  of  the  metals  throuo-h- 
out  the  ^^•estern  world  originated  soon  after  the  discovery  of 
gold  in  California  and  Australia,  at  a  time  when  the  yield  was 
at  what  has  since  proved  to  have  been  its  maximum,  but  which 
was  then  expected  by  many  to  continue  on  an  ascending  scale 
for  an  indefinite  ])eriod.  An  eminent  English  writer  (De  Quin- 
cey)  pubH.^lied  at  that  time  an  elaborate  collation  of  current  ac- 
counts, from  which  he  arrived  at  the  conclusion  that  the 
annual  out-turn  of  gold  would  soon  reach  seventy  millions  ster- 
ling, or  1350,000,000.  On  tlie  basis  of  such  expectations,  the 
governments  of  Europe  were  invoked  by  Chevalier  and  others 
to  prevent  the  anticipated  depreciation  in  the  value  of  money, 
or,  in  other  words,  the  anticipated  rise  in  general  prices,  by 
the  demonetization,  not  of  silver,  but  of  ejold. 

Chevalier  (Fall  of  Gold,  1856-'57)  said: 

'The  quantity  of  gold  annually  thrown  on  the  genei-al 
market  approaches,  in  round  numbers,  a  milliard  of  francs 
($200,000,000). 

These  two  countries  (California  and  Australia)  must,  for  yet 
a  long  series  of  years,  produce  gold  in  such  quantities  and  on 
sufh  conditions  as  to  render  a  marked  decline  in  its  value  in- 
evitable. 

1 1  is  absolutely  certain  that  so  vast  a  production  should  l)e 
accompanied  with  a  great  reduction  in  value. 

in  no  direction  can  a  new  outlet  be  seen  sufficiently  large 
to  alisorb  the  extraordinary  production  of  gold  which  we  are 
now  witnessing,  so  as  to  prevent  a  fall  in  its  value. 

Uidess,  then,  we  possess  a  very  robust  faith  in  the  immo- 
bility of  human  affairs,  we  must  regard  the  fall  in  the  value  of 
gold  as  an  event  for  which  we  should  prepare  without  loss  of 
time.' 

Under  these  appeals  of  Chevalier  and  others,  several  na- 


PRICE  AND  .ITS  DEPENDENCE  UPON  CURRENCY.       7,05 

tions  in  Er.rope,  notably  Germany  and  Austria  in  1857,  de- 
monetized gold.  It  is  probable  that  the  movement  in  that 
direction  wonld  have  become  universal  in  Europe  but  for  the 
resistance  of  France.  It  was  changed,  at  least  as  early  as  1865, 
into  a  movement  for  the  demonetization  of  silver.  In  the  con- 
vention of  1865,  in  Avhich  the  Latin  union  was  formed,  Bel- 
gium, Italy,  and  Switzerland  insisted  strenuously  upon  the 
adoption  of  the  gold  standard,  but  were  overruled  by  France. 
But  this  change,  from  demonetizing  gold  to  demonetizing  sil- 
ver, was  more  of  form  than  of  substance.  The  object  aimed 
at  by  both  was  through  a  disuse  of  one  of  the  money  metals  to  pro- 
tect the  creditor  classes  and  those  having  fixed  incomes  against  a 
fall  in  the  value  of  money  and  a  rise  in  general  prices.  Thic  is 
the  pith  and  marrow  of  the  monetary  discussions  of  the  last 
twenty-live  years." 


PHiLOSOPHY     OF     rKIOS. 


Chapter  in. 

PRICE  AND  ITS  RELATION  TO  BUSINESS. 

The  laborinor  classes  of  all  civilized  nations  have  been, 
and  are,  as  a  body,  poor.  All  wealth  being  the  production  of 
lal)or,  therefore,  lal)orers  could  have  possessed  it,  had  not 
sometliing  intervened  to  prevent  this  natural  result.  Even  in 
our  own  country,  where  the  reward  of  la])or  is  greater  than  in 
most  others,  some  cause  is  operating  with  continual  and  grow- 
ing effect  to  separate  production  from  the  producer.  The  wrong 
is  evident,  but  neither  statesmen  nor  philanthropists  liave 
traced  it  to  its  true  source ;  and  hence  they  have  not  been  able 
to  formulate  any  plan  sufficient  for  its  removal.  Believing 
both  cause  and  remedy  lie  with  our  circulating  medium,  and 
that  tlie  great  mass  of  our  people  have  been  led  to  distrust 
their  own  competency  to  comprehend  the  subject,  I  propose 
to  discuss  it  in  the  plainest  terms  possible.  In  doing  so,  con- 
clu.sions  must  be  arrived  at  after  carefully  considering  all  the 
factors  entering  into  them.  Solid  facts  and  not  al)struse  the- 
ories are  necessary  in  the  examination  of  this  question. 

In  a  ])revious  chapter  I  have  shov/n  the  dependence  of 


PRICE  AlfD  ITS  RELATION  TO  BUSINESS.  107 

price  upon  the  amount  of  domestic  currency  in  circulation.  In 
this  chapter  I  shall  endeavor  to  explain  the  relation  that  price 
has  to  the  business  of  the  country,  Not  to  any  particular 
I)ranch,  but  to  the  general  business  conducted  among  us  as 
citizens. 

I  shall  begin  by  showing  the  various  stages  through  which 
the  volume  of  our  currency  has  passed ;  the  numerous  laws 
l)earing  upon  it,  and  the  evident  conclusions  to  be  drawn  frora 
the  arguments  and  proofs  presented.  I  shall  neither  conceal 
nor  color  anything  to  affect  or  promote  my  argument,  but  give 
plain  facts  in  plain  terms.- 

The  awakening  interest  manifested  among  all  classes  of 
people  upon  this  question,  seems  to  demand  a  thorough  inquiry 
into  the  subject  matter.  "Without  further  delay,  only  to  ask  of 
my  readers  a  careful  perusal  in  a  friendly  but  critical  spirit,  I 
will  begin  the  investitjation. 

The  story  of  currency  contraction,  has  become  an  "  oft-told 
tale";  yet,  being  a  crime  of  a  free  government  against  a  free 
])eople,  and  by  their  ov/n  chosen  representatives,  it  should  be 
repeated  as  often  as  possible,  that  all  may  come  to  know  where, 
and  through  whose  instrumentality  their  present  distressing 
condition  originated. 

After  the  war  closed  in  April,  1865,  tl^  strength  of  the 
government  had  been  tested,  and  the  preservation  of  tlie  Union 
clearly  demonstrated.  The  people  once  more  directed  their 
attention  to  the  cultivation  of  the  arts  of  peace.  January  1, 
1866,  found  us  as  a  nation  about  three  billions  of  dollars  in 
debt,  made  up  of  interest  and  non-interest  bearing  obligations. 
It  is  worthy  of  remark  at  this  point,  and  is  a  fact  not  generally 
known,  that  up  to  the  time  of  Lee's  surrender  not  a  single  dol- 
lar of  gold  or  silver  had  been  subscribed  or  paid  by  any  l)anker 
or  capitalist,  either  in  Europe  or  America,  for  a  bond  of  the 
United  States.  Also,  that  it  was  about  seven  months  after 
that  event  before  a  single  bond  had  been  sold  in  the  money 


^ 


108  PHILOSOPHY    OF   PRICE. 

markets  of  the  Old  World.  Thus  we  see  all  this  vast  amount 
of  debt  was  being  handled  by  our  own  people ;  and  their  pros- 
perity at  that  period  has  never  been  equaled  before  nor  since. 
The  reason  for  this  is  plain.  About  one  billion  live  hundred 
millions  of  this  indebtedness  was  being  used  by  the  people  as 
a  circulating  medium.  In  that  capacity  it  was  giving  the  gov- 
ernment no  trouble.  Gold  and  silver  were  hiding  where  they 
always  do  in  times  of  trouble,  and  dared  not  venture  out ;  con- 
sequently, they  did  not  enter  into  the  aggregate  of  the  circu- 
lating medium  at  that  time.  Among  this  currency  was  a  large 
amount  of  interest-bearing  notes,  variously  estimated  from 
twelve  to  fifteen  hundred  millions.  This  with  greenbacks  and 
national  bank  bills  made  up  the  currency  of  the  nation. 

Greenbacks  had  risen  from  46  to  71  per  cent  measured  by 
gold  value ;  this,  too,  with  over  $50  of  circulating  medium  per 
capita  of  population.  Our  situation  at  that  time  indicated 
many  years  of  financial  prosperity.  Our  debt  was  being  cared 
for,  and  held  among  our  own  people.  The  men  of  both  armie& 
had  returned  home,  and  were  uniting  their  efforts  to  rebuild 
the  wealth  of  the  nation  destroyed  by  merciless  war.  The  im- 
petus given  to  business  and  production  by  this  means  was  truly 
marvelous.  Not  only  did  this  vast  increase  of  the  volume  of 
business  call  for  more  currency,  but  the  entire  South  had  to  be 
supplied.  Human  wisdom,  to-day,  can  find  no  reason  for  the 
subsequent  course  adopted  by  the  government.  The  fact  of 
supplying  the  people  of  tlie  South  from  this  stock  of  currency 
was,  of  itself,  a  question  of  great  moment  to  the  whole  nation, 
which  seems  to  have  been  entirely  overlooked.  There  is  not 
the  least  doubt,  had  Congress  issued  full  legal  tenders  for  this 
whole  amount,  they  would  have  appreciated  to  gold  value  long 
before  specie  payment  was  enforced.  "After  the  battle  come 
the  ghouls,  to  fatten  and  thrive  on  its  victims."  Just  so  v.-ith 
regard  to  our  national  finances.  At  that  time  the  bankers  and 
capitalists  came  in  swarms  to  enricli  themselves  by  reason  of 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  109 

the  nation's  disaster.  The  lamented  Garfield  said  "  that  tlie 
people  would  rememl^er  the  bankers  and  capitalists  of  Wall 
street  as  the  Germans  rememl)ered  the  robbers  of  the  river 
Hhine,  who  never  came  out  from  their  strong-holds  but  to 
plunder  and  rob  them." 

They  performed  their  task  so  well  that  at  one  blow  twelve 
hundred  millions  of  what  had  been  circulating  as  currency, 
was  converted  into  5-20  bonds,  bearing  six  per  cent  interest, 
and  sold  abroad.  The  interest  on  these  bonds  was  payable  in 
coin,  and  since  that  time  we  have  been  raising  and  shipping 
corn,  wheat,  cotton,  etc.,  to  pay  it.  The  annals  of  economic 
history  affords  no  parallel  to  this  great  crime  against  the  indus- 
tries of  a  confiding  people.  The  shock  that  imm.ediately  fol- 
lowed beggars  description.  The  people  had  learned,  during 
the  war,  to  indulge  somewhat  in  luxuries.  The  desire  to  live 
in  more  ease  and  comfort  had  naturally  grown  upon  them  dur- 
ing this  season  of  prosperity.  They  enlarged  their  business, 
built  new  homes,  bought  new  farms  and  began  new  enterprises, 
for  which,  to  a  considerable  extent,  they  had  gone  in  debt,  an- 
ticipating as  easy  payments  in  the  future  as  had  been  made  in 
the  past.  They  dreamed  of  no  change  in  values,  and  all  was 
progressing  happily  and  smoothly,  when,  like  a  flash  of  light- 
ning from  a  clear  sky,  came  this  act  of  Congress  which  took 
from  them  more  than  one-half  of  their  means  of  papnent. 
Every  debt,  national  and  individual,  was  by  means  of  that  act 
doubled.  This  brought  financial  trouble  all  over  the  land. 
Kot  satisfied  with  funding  this  laro-e  amount  of  circulatins: 
medium,  early  in  that  year  (April,  1866),  Congress  permitted 
the  Secretary  of  the  Treasury  to  further  contract  the  currency 
by  burning  up  on  an  average  five  million  dollars  of  greenbacks 
each  month.  In  order  to  obtain  these  greenbacks,  he  was  au- 
thorized to  sell  bonds  drawing  interest  and  buy  them.  This 
continued  until  February  4,  1868.  By  that  time  a  wail  had 
gone  up  from  the  peoj^le  that  even  Congress  could. not  ignore. 


110  PHILOSOPHY  OF   PRICE. 

and  an  act  was  passed  forbidding  tlie  Secretary  of  the  Treasu- 
ry reducing  the  circulating  medium  further.  President  Grant 
reinsed  to  sign  tlie  bill,  and  it  became  a  law  without  his  signa- 
ture. In  the  mean  time  failures  had  increased  from  495  in 
1863  to  2,864  in  1868.  Our  currency  had  been  reduced  in 
volume  from  $1,863,409,216  in  1866  to  less  tlian  $794,756,112 
in  1868.  We  learn  from  these  figures  both  the  cause  and  the 
ejffect. 

One  otlier  feature  of  the  question  that  escapes  notice  is,, 
at  this  time  bonds  were  selling  at  a  premium.  If  that  fact 
was  significant  in  any  sense,  did  it  not  sliow  the  rapid  ap- 
preciation, in  gold  value,  of  our  currency  as  it  then  was  consti- 
tuted ? 

About  this  time  there  was  also  considerable  discussion 
through  the  press  as  to  what  these  bonds  should  be  paid  in.  It 
was  plainly  apparent  that  the  government  would  take  advant- 
age of  its  option  and  soon  begin  to  call  them  in. 

From  1863  to  1867  there  had  been  bonds  sold  amount- 
ing to  $1,429,392,400.  These  were  all  paid  for  in  greenbacks 
at  par.  Reckoning  the  discount  between  greenbacks-  and  gold 
we  find  that  the  price  paid  in  gold  value  was  only  $945,251,- 
220,  leaving  a  difierence  of  $484,141,180.  It  requires  no 
great  thought  to  understand  that  when  these  bonds  were  de- 
clared payable  in  coin  their  value  was  increased  by  this  dif- 
ference. 

March  18,  1869,  the  following  act  was  passed  by  Con- 
gress: 

"That  in  order  to  remove  any  doubt  as  to  the  purpose  of 
the  government  to  discharge  all  jnst  obligations  to  the  public 
creditors  and  to  settle  conflicting  questions  and  interpretations 
of  tlie  law  by  virtue  of  which  such  obligations  have  been  contract- 
ed, it  is  hereby  provided  and  declared  that  the  faith  of  the  United 
States  is  solemnly  pledged  to  the  payment  in  coin  or  its  equiv- 
alent of  all  the  ohligations  of  the  United  Stateft  not  bearing  in- 
terest, known  as  United  States  notes,  and  of  all  the  ini'  luM- 
hcarinij  ohliyaiions  of  tlie  United  States,  except  in  cases  where 


PRICE  AND  ITS  KELATION  TO  BUSINESS.  Ill 

the  law  authorizing'  the  issue  of  any  such  obligations  has  ex- 
pressly provided  that  the  same  may  be  paid  i)i  lawful  money 
or  other  currency  than  gold  and  silver." 

When  this  became  a  law  the  bondholders  had  thereby 
made,  through  its  operation  and  ei?ects,  the  sum  of  $484,141,- 
180,  in  the  exchange  of  greenbacks  for  bonds  that  were  to  be 
p?id  in  coin. 

That  the  original  contract  between  the  people  and  the 
bondholder  implied  tlieir  payment  in  lawful  money,  either 
paper  or  coin,  1  quote  the  following  as  proof. 

In  a  speech  delivered  in  the  Senate  February  27,  1867, 

John  Sherman  said : 

"Equity  and  justice  are  amply  satistied  if  we  redeem 
these  bonds  at  the  end  of  five  years  in  the  same  kind  of  money, 
of  the  same  intrinsic  value  it  bore  at  the  time  they  were  issued. 
Gentlemen  may  reason  about  this  matter  over  and  over  again, 
and  they  cannot  come  to  any  other  conclusion  ;  at  least  that  has 
been  my  conclusion  after  the  most  careful  consideration.  Sen- 
ators are  sometimes  in  the  habit,  in  order  to  defeat  the  argu- 
ment of  an  antagonist,  of  saying  that  this  is  repudiation.  Why, 
sir,  every  citizen  of  the  United  States  lias  conformed  his  busi- 
ness to  the  legal  tender  clause.  He  has  collected  and  paid  his 
debts  accordingly.'' 

In  1868  he  -wrote  to  a  friend  as  follows : 

'"''Dear  8ir  ^  I  was  pleased  to  receive  your  letter.  My 
personal  interests  are  the  same  as  yours,  but  like  you,  I  do  not 
intend  to  be  influenced  by  them.  My  construction  of  the  law 
is  the  result  of  careful  examination,  and  I  feel  quite  sure  an 
im.partial  court  would  confirm  it,  if  the  case  could  be  tried  be- 
fore a  court.  I  send  you  my  views  as  fully  stated  in  a  speedi. 
Your  idea  is  that  we  propose  to  repudiate  or  violate  a  promise 
when  we  offer  to  redeem  the  'principal'  in  legal  tenders.  I 
think  the  bondholder  violates  his  promise  when  he  refuses  to 
take  the  same  kind  of  money  he  paid  for  the  bonds.  If  the 
case  is  to  be  tested  by  the  law,  I  am  right ;  if  it  is  to  be  tested  by 
Jay  Cook's  advertisements,  I  am  wrong.  I  hate  repudiation  or 
anything  like  it,  but  we  ouglit  not  to  be  deterred  from  doing 
what  is  right  by  fear  of  undeserved  epithets.  If  under  tlie 
law  as  it  stands,  the  holders  of  the  .5-20's  can  only  be 
paid  in  gold  then  we  are  repudiators  if  we  propose  to  pay 


112  PHILOSOPHY    OF     PRICE. 

Otherwise.  If  the  bondholder  can  legally  demand  only  the 
kind  of  money  he  paid,  then  he  is  a  repudiator  and  extortioner 
to  demand  money  more  valuable  than  he  gave. 

Truly  yours, 

John  Sherman." 

Again  in  1869,  in  another  speech  in  the  Senate,   Mr. 

Sherman  said : 

"The  contraction  of  the  currency  is  a  far  more  distressing 
operation  than  Senators  suppose.  Our  own  and  other  nations 
have  gone  through  that  process  before.  It  is  not  possible  to  take 
that  voyage  without  the  sorest  distress.  To  every  person,  ex- 
cept a  capitalist  out  of  debt,  or  a  salaried  officer,  or  annuitant, 
it  is  a  period  of  loss,  danger,  lassitude  of  trade,  fall  of  wages, 
suspension  of  enterprise,  bankruptcy  and  disaster.  It  means 
the  ruin  of  all  dealers  whose  debts  are  twice  their  business 
capital,  though  one-third  less  than  their  actual  property.  It 
means  the  tall  of,  all  agricultural  productions  without  any 
great  reduction  of  taxes.  What  prudent  man  would  dare  to 
build  a  house,  a  railroad,  a  factory,  or  a  barn,  with  the  certain 
fact  before  him  that  the  greenback  that  he  puts  into  his  im- 
provements will,  in  a  few  years,  be  worth  35  per  cent,  more 
than  his  improvements  are  then  worth  ?  When  the  day  comes, 
every  man,  as  the  sailor  says,  will  be  close-reefed  ;  all  enterprise 
will  be  suspended ;  every  bank  will  have  contracted  its  cur- 
rency to  the  lowest  limit,  and  the  debtor  compelled  to  meet  in 
coin  a  debt  contracted  in  currency  will  find  the  coin  hoarded 
in  the  treasury,  and  no  representative  of  coin  in  circulation ; 
his  property  shrunk,  not  only  to  the  extent  of  the  contraction  of 
the  currency,  but  still  more  by  the  artificial  scarcity  made  by 
the  holders  of  gold.  To  attempt  this  is  to  impose  npo^i  our 
people y  by  arresting  them  in  the  midst  of  tlieir  lawful  business, 
and  applying  a  new  standard  of  value,  to  their  property  with- 
out any  deduction  of  their  debts,  or  giving  them  any  opportu- 
nity to  compound  with  their  creditors,  or  to  distribute  their 
losses ;  and  would  be  an  act  of  folly  without  example  in  evil  in 
modern  times." 

Hon.  B.  F.  Wade,  known  from  Maine  to  California  for 
his  sterling  honesty  and  incorruptibility,  in  a  letter  to  a  friend, 
said  : 

"Vice-President's  Chamber, 
Washington,  Dec,  13,  1867. 
Tours  of  the  Sth  inst.  is  received,  and  I  must  cordially 


PKICE  AND  ITS  RELATION  TO  BUSINESS.  113 

agree  with  every  word  and  sentence  of  it.  I  am  for  the  labor- 
ing portion  of  our  people.  The  rich  can  take  care  of  them- 
selves. While  I  nmst  scrupnlonsly  live  up  to  all  the  contracts 
of  the  Government,  and  tight  repudiation  to  the  death,  I  will 
iight  the  bondholder  as  resolutely  when  he  undertakes  to  get 
more  than  tlie  pound  of  flesh.  We  never  agreed  to  pay  the 
5-20's  in  gold ;  no  man  can  And  it  in  the  bond,  and  1  never 
will  consent  to  have  one  payment  for  the  people.  It  would 
sink  any  I3arty,  and  it  ought  to.  To  talk  of  specie  payments  or 
a  return  to  specie  under  present  circumstances,  is  to  talk  like  a 
fool.  It  would  destroy  the  country  as  effectually  as  a  tire. 
And  any  contraction  of  the  currency  at  this  time  is  about  as 
bad.     But  I  have  not  time  to  give  my  ideas  in  full. 

Yours  truly, 

Benjamin  F.  Wade. 
Capt.  A.  Denny,  Eaton,  O." 

Garrett  Davis  offered  the  following  amendment : 

"That  the  just  and  equitable  measure  of  the  obligations  of 
the  United  States  upon  their  outstanding  bonds,  is  the  value  in 
gold  and  silver  coin  of  the  paper  currency  advanced  and  paid 
to  the  Government  on  these  bonds." 

He  declared  the  resolution  "robbery  and  would  make  the 
people  pay  nearly  $900,000,000  more  than  by  law  and  equity 
they  should  l^a3^" 

Senator  Bayard  seconded  the  arguments  of  Senator  Da\ns  : 

"Suppose  instead  of  issuing  paper  money,  it  had  pleased 
Congress  to  order  an  abasement  of  our  national  coinage.  Sup- 
pose twenty-five  per  cent.  uK^re  of  alloy  or  worthless  metal  had 
been  interjected  into  our  currency,  and  with  that  base  coinage, 
men  had  come  forward  to  buy  your  bonds.  What  would  be 
thought  of  the  man  who,  when  the  day  of  payment  of  those 
bonds  arrived,  should  say,  'I  gave  you  lead,  or  lead  in  certain 
proportions ;  but  for  all  the  worthless  metal  I  handed  you,  you 
must  give  me  back  pure  gold.'  Whether  he  was  more  mad- 
dened or  more  dishonest  would  be  the  only  question  arising 
in  men's  minds." 

The  facts  are,  the  Government  received  nothing  but  green- 
backs for  the  bonds,  dollar  for  dollar,  during  the  entire  war ; 
that  we  never  agreed  to  liquidate  the  principal  of  the  debt  in 
gold,  the  original  contract  being  far  from  so  stipulating ;  and 


IH  PHILOSOPHY    OF  PKICE. 

that  the  contract  in  question  was  ignored  and  another  substi- 
tuted in  the  interest  of  the  bondholders,  it  being  this  latter  that 
provided  for  the  redemption  of  the  bonds  in  coin.  Tlie  ablest 
men  in  all  parties  and  in  Congress  have  made  that  acknowledg- 
ment. To  quote  the  language  of  the  late  Senator  O.  P.  Mor- 
ton, of  Indiana : 

"We  should  do  foul  injustice  to  the  Government,  and  to 
the  people  of  tlie  United  States,  after  we  sold  those  bonds  on  an 
average  for  not  more  than  sixty  cents  on  the  dollar,  now  to 
propose  to  make  a  new  contract  for  the  benefit  of  the  bond- 
liolders." 

And  that  noble  old  Commoner,  Thaddeus  Stevens,  ex- 
pressed the  sense  of  every  true  patriot  in  the  House  of  Repre- 
sentatives when  he  uttered  the  following  emphatic  declarations 
in  1868,  his  voice  trembling  with  emotion  at  the  outrage  which 
it  was  sought  by  powerful  combinations  to  put  into  effect  fix 
the  interest  of  the  bondholders  in  changing  the  ■5-20's  into 
gold  bonds : 

"If  I  knew  that  any  party  in  this  country  would  go  for 
paying  in  coin  that  which  is  payable  in  money,  thus  enhancing 
it  one-half ;  if  I  knew  there  was  such  a  platform  and  such  a 
determination  this  day  on  the  part  of  any  party,  I  would  vote 
for  the  other  side,  Frank  Blair  and  all.  I  would  vote  for  no 
such  swindle  upon  the  tax-payei's  of  this  country.  I  would 
vote  for  no  such  speculation  in  favor  of  the  large  bondholders, 
the  millionaires  who  took  advantage  of  our  folly  in  granting 
them  coin  payment  of  interest." 

The  object  of  the  framers  of  tlie  law  could  not  have  been 
to  strengthen  the  public  credit.  The  amount  of  credit  which 
either  a  nation  or  an  individual  can  possess,  depends  upon  tlie 
strength  and  extent  of  the  belief  among  lenders  and  capitalists 
that  the  borrower  is  both  al)le  and  willing  to  meet  the  e.xact 
terms  of  his  obligations.  An  oflFer  to  do  more  would  subject 
the  debtor  to  well-merited  suspicion  and  distrust.  He  can  not 
improve  his  credit  by  promising  to  pay  a  larger  amount  of 
money,  or  money  of  greater  value,  than  the  terms  of  the  obli- 
gations held  against  him  require. 


PRICE  AND  ITS  RELATION  TO  BUSINESS  115 

The  sufficient,  best,  and  only  means  of  improving  credit, 
public  or  private,  is  exact  performance  of  contracts.  The 
debtor  that  insists  upon  all  his  rights  and  at  the  same  time  per- 
forms all  his  duties,  is  the  one  most  confided  in.  Credit  can 
be  strengthened  by  fuIJiUing  contracts,  but  not  by  changing 
them  ;  by  performing  all  promises  and  not  by  making  new 
ones.  ISTor  could  the  honest  object  of  the  framers  of  the  law 
liave  been  to  advance  the  value  of  bonds  already  sold  and  in 
the  hands  of  purchasers.  It  would  be  of  great  public  import- 
ance to  enhance  the  value  of  bonds  which  the  Government 
was  proposing  to  sell,  but  to  overload  the  country  with  addi- 
tional burdens  for  the  purpose  of  enhancing  the  value  of  out- 
standing bonds,  would  be  to  subserve  gratuitously  and  unjustly, 
pnvate  interest  at  the  public  expense.  It  would  be  very  grati- 
fying to  national  pride  to  have  the  lx)nds  of  the  United  States, 
now  in  private  hands,  command  the  highest  prices  in  t\\Q 
markets  of  the  world,  but  it  could  scarcely  be  deemed  a  wise 
financial  policy  in  the  present  condition  of  the  country  to  ob- 
tain that  gratifieatictn  by  paying  a  premium  for  it.  If,  how- 
ever, it  were  deemed  advisable  to  enhance  the  value  of  bonds 
already  sold,  it  should  have  been  done  by  some  plain  and  direct 
method,  and  in  such  a  way  that  the  country  might  know  ex- 
actly what  it  was  going  to  cost — as  for  instance,  by  increasing 
the  principal  or  rate  of  interest  of  outstanding  bonds.  It 
should  not  have  been  done  by  the  indirect  method  of  changing 
the  medium  of  payment  from  gold  or  silver,  at  the  option  of 
the  Government,  to  gold  alone.  The  additional  burden  which 
that  might  impose,  from  a  rise  in  tlie  value  of  gold,  is  incal- 
culable. 

The  passage  of  this  act,  while  it  declared  the  bonds  pay- 
able in  coin,  was  done  when  coin  was  at  a  premium  of  nearly 
25  per  cent,  v/hich,  of  course,  added  at  once  25  per  cent  of 
valr.e  to  the  bonds,  and  at  the  same  time  lessened  the  means  of 
payment  to  the  same  extent  by  its  effects  in  producing  a  gen- 


11 0  PHILOSOPHY     OF     PKICE. 

era]  decline  of  prices.  Why  it  was  necessary  at  tliat  time  to 
strengthen  the  pubhc  credit,  and  why  it  was  an  act  of  justice  (?) 
to  the  people  of  the  United  States  to  have  the  whole  basis  of 
their  indebtedness  changed  and  increased  by  fully  one-fonrth 
its  amount,  will  always  remain  a  mystery  to  every  student  of 
political  economy. 

This  was  the  first  time  the  contract  between  the  people 
and  the  bondholder  had  been  changed.  I  quote  from  an  emi- 
nei}t  English  author  on  this  point.  Professor  McCulloch.  He 
says : 

"  To  make  any  direct  change  in  the  terms  of  the  contract 
entered  into  between  individuals  would  be  too  barefaced  and 
tyrannical  an  interference  with  the  rights  of  property  to  be 
tolerated. 

Those,  thsrefore,  who  endeavor  to  enrich  one  part  of  soci- 
ety at  the  expense  of  another^  find  it  necessary  to  act  vnth  great 
caution  and  reserve,  and  to  suhstitute  artifice  for  open  and 
avovjed  injustice.  Instead  of  directly  altering  the  stipulations 
in  the  contract,  they  ingenuously  bethought  themselves  of  alter- 
ing the  standard  by  which  the  stipulations  were  to  be  adjusted. 

They  have  not  said,  in  so  many  words,  that  10  or  20  per 
cent  should  be  added  or  deducted  from  the  nmtual  debts  of 
society,  but  they  have,  nevertheless,  effected  this  by  making  a 
difference  in  the  value  of  the  currency."  (Increased  or  dimin- 
ished its  quantity.) 

But,  as  the  sequel  shows,  this  was  only  a  portion  of  the 
scheme.  The  next  year,  July  14,  1870,  Congress  passed  a 
funding  bill  which  authorized  the  sale  or  exchange  at  par  for 
other  bonds,  fifteen  hundred  millions  of  interest-bearing  bonds 
to  run  10,  20  and  30  years,  with  interest  and  principal  payable 
in  coin.  After  the  funding  of  these  bonds  liad  been  accom- 
plished the  last  act  was  to  be  perpetrated.  Feb.  12tli,  1873, 
Congress  passed  an  act  dropping  the  standard  silver  dollar  from 
our  coinage,  and  in  1875  demonetized  it.  This  act  made  our 
whole  national  indebtedness  payable  in  gold  and  necessarily 
creating  a  new  basis  for  the  payment  of  all  debts,  public  and 
private. 


PRICE  a:;d  its  kelation  to  business.  117 

This  ao-ain  added  to  the  burden  of  debt  and  also  increased 
the  difficulties  of  payment.  The  contract  had  been  changed 
again.  It  seems  as  though  the  moneyed  men  on  either  side  of 
the  Atlantic  owned  our  Congress ;  and  the  people,  to  whom  we 
must  look  for  means  of  payment,  were  ignored  entirely. 

The  fact  that  over  eleven  thousand  failures  were  reported 
during  these  two  years  is  sufficient  proof  of  the  manner  it  was 
"benefitins"  the  nation.  But  this  was  not  enough.  Jan. 
1-1,  1875,  the  specie  resmuption  act  was  passed.  It  author- 
ized the  Secretary  of  the  Treasury  to  first  sell  bonds  to  buy 
silver  for  the  purpose  of  exchanging  and  withdrawing  the  pos- 
tal currency  and  scrip  from  circulation.  About  eighteen  mil- 
lions of  ■  5  per  cent  bonds  were  sold  for  that  purpose.  There 
were  also  sixty-five  millions  of  4  1-2  per  cent,  and  twenty-live 
millions  of  4  per  cent  bonds  sold  for  the  purpose  of  retiring 
legal  tender  notes,  which  are  still  drawing  interest.  Here  we 
see  bonds  of  the  United  States  sold  on  a  long  time  that  are 
now  worth,  and  command  a  premium  of  27  per  cent,  to  take 
from  the  people  the  best  small  currency  they  ever  had,  and  to 
retire  from  circulation  the  best  medium  of  exchange  known  to 
any  civilized  nation. 

The  failures  fojlovdng  this,  1875-G-7,  for  each  year  re- 
spectively were  7,740,  9,092  and  10,480.  This  indicates  the 
''  success  "  of  the  experiment.  The  silver  commission,  in  their 
report,  say : 

"Its  true  character,  as  now  interpreted,  was  neither 
avowed  in  Congress  nor  understood  by  the  country  ai  the  time 
of  its  passage.  The  phraseology  of  the  act  created  the  im- 
pression that  there  was  to  be  no^  reduction  of  the  ago;regate  of 
paper  money,  but  that  legal-tender  notes  were  to  be  diminished 
only  as  bank-notes  were  increased.  As  the  act  is  administered 
in  practice,  both  classes  of  notes  are  being  reduced  at  the  same 
time,  while  the  population  of  the  country  is  expanding.  The 
words  of  the  act  may  justify  this  method  of  administration, 
but  it  was  not  with  that  understanding  that  it  was  sanctioned 
by  Congress. 


113  PwlLOSOPHY     OF     PKICE. 

A  niore  fatal  uiisconception  grew  out  of  the  ignorance 
that  prevailed  aliwost  Viniversally  until  after  the  passage  of  the 
resumption  act,  that  silver  had  been  demonetized,  and  hence, 
that  a  law  providing  for  specie  payn^ents  was  really  a  law  for 
gold  payments.  The  people  were  not  aware  that  coin  then 
meant  gold,  and  that  coin  payments  involved  the  shriveling  of 
all  values  to  the  measure  of  a  single  metal.  They  were  in  fa- 
vor of  resumption  but  not  conliscation,  and  they  were  not 
aware  that  resumption  as  proposed  was  but  another  name  for 
spoliation.  Although  the  period  tixed  for  this  spoliation  was 
nominally  in  the  future,  it  actually  commenced  at  once,  and  is 
now  proceeding  day  by  day.  It  having  been  made  certain,  so 
far  as  the  law  could  make  it  certain,  that  each  dollar  of  the 
actual  money  of  the  country  would,  on  a  given  day  in  the 
near  future,  be  raised  to  the  value  of  a  gold  dollar,  the  univer- 
sal tendency  was,  and  has  continued  to  be,  to  change  all  forms 
of  property  into  money,  and  to  refuse  investment  in  either 
property  or  productive  enterprises.  Moneyed  capitalists,  know- 
ing the  disastrous  effects  which  the  impending  fall  of  prices 
would  have  on  the  financial  condition  of  borrowers,  pruden- 
tially  withdrew  or  diminished  all  credits  and  hastened  to  real- 
ize on  securities.  They  have  never  been  deceived,  for  one  mo- 
ment, by  the  idle  fallacy  that  resumption  in  gold  involved  an 
appreciation  in  the  value  of  the  legal-tender  notes  and  a  fall  in 
prices  only  to  the  extent  of  the  present  difference  between  the 
value  of  those  notes  and  gold.  They  knew  that  the  apprecia- 
tion of  legal-tender  notes  must  reach  that  vastly  higher  level 
which  the  value  of  gold  must  reach  when  hundreds  of  millions 
of  it  were  and  are  demanded  for  resum]jtion,  and  that  prices 
would  sink  to  a  corresponding  point  of  depression." 

In  the  campaign  of  1876  there  appeared  a  new  feature  in 
the  economic  views  entertained  by  the  people.  Previous  to 
that  time  they  had  considered  "  finance  "  too  deep  a  study,  and 
in  consequence  it  had  l)een  left  ahnost  entirely  with  their  con- 
gressional representatives  for  a  solution.  But,  then,  the  ques- 
tion of  American  finances  began  to  be  'discussed  by  them — the 
acts  of  Congi-egs  and  votes  of  members  were  freely  criticised. 
Ugly  (juestions  were  being  asked,  which  soon  developed  the 
fact  that  the  average  Congressman  was  about  as  ignorant  of  the 
effect  of  his  vote  as  were  his  constituent^?.     All  that  was  neces- 


rRicE  AND  rre  eklation  to  business.  119 

sary  to  pass  an  act  touchiiig  the  fiuances  was  to  "convert"  the 
few  leaders. 

The  most  striking  evidence,  perhaps,  of  tiie  pul)iic  inatten- 
tion to  the  eft'ect  of  the  coinage  act  of  1873,  is  the  fact  that 
President  Grant,  who  signed  it,  and  who  was  critically  observ- 
ant of  the  legislation  of  Congress,  had  no  knowledge  of  what 
it  really  accomplished  in  relation  to  the  demonetization  of  sil- 
ver, and  was  still  uninformed  abont  it  as  late  as  the  following 
October.  If  the  President  of  the  United  States,  in  daily  in- 
tercourse .with  the  pul)lic  men  of  the  country,  had  failed  to 
hear  during  certainly  eight  months  that  the  laws  no  longer  per- 
mitted money  to  l)e  coined  from  silver,  it  must  be  true  that  the 
ignorance  on  the  subject  v/as  general  and  profound. 

In  a  letter  written  October  3,  1873,  to  Mr.  Cowdrey,  Gen- 
eral Grant  said : 

'•I  wonder  tiiat  silver  is  not  already  coming  into  the  mar- 
ket to  supply  the  deficiency  in  the  circulating  medium.  *  *  * 
Experience  has  pro\-ed  that  it  takes  about  $4:0.()00,000  of  frac- 
tional currency  to  make  tlie  small  change  necessary  for  the 
transaction  of  the  business  of  the  country.  Silver  will  gradu- 
ally t^ike  the  place  of  this  currency,  and  furtlier,  will  become 
the  standard  of  values,  which  will  be  hoarded  in  a  small  way. 
I  estimate  that  this  will  consume  from  two  to  three  hundred 
millions  in  time,  of  this  species  of  our  circulating  medium. 
*  *  *  I  confess  to  a  desire  to  see  a  limited  hoarding  of 
money.  But  I  want  to  see  a  hoarding  of  something  that  is  a 
standard  of  value  the  world  over.     Silver  is  tliis. 

Our  mines  are  now  producing  almost  unliinited  amounts 
of  silver,  and  it  is  becoming  a  cpiestion,  'What  shall  we  do 
with  it?'  I  suggest  here  a  solution  which  will  answer  for 
some  years,  to  put  it  in  circulation,  keeping  it  there  until  it  is 
fixed,  and  then  we  will  find  other  markets.'' 

This  may,  to  some  extent,  perhaps,    explain  how   John 

Sherman  and  Hugh  McCulloch  became  millionaires,  and  v/hy 

Pobert  Schenck  was  sent  to  the  Court  of  St.  James  to  teach 

tlie  English  people  how  to  plaj-  "  draw  poker."     However  this 

may  be,  a  cry  went  up  from  the  peo})le  for  relief.     Agitation 

and  discussion  disclosed  mar.y  of  the  frauds  embodied  in  the 


120  PHILOSOPHY     OF    PRICE. 

acts  of  Congress,  and  through  fear  of  political  destruction,  on 
the  28th  day  of  February,  1878,  the  standard  silver  dollar  was 
rehabilitated  with  its  legal-tender  power,  and  the  coinage  of  at 
least  two  millions  per  month  was  made  compulsory. 

The  act  of  May  31st,  of  the  same  year,  forbade  the  further 
retiring  of  greenbacks.  During  this  year  business  failures  in 
the  United  States  amounted  to  more  than  $234,000,000 — the 
most  disastrous  since  the  almost  total  extinction  of  values  in 
1S57,  which  was  at  that  time  produced  from  the  same  causes. 
"We  notice  also  that  the  aggregate  of  failures  from  1866  to  1878 
amounted  to  the  enormous  sum  of  $1,784,394,132.  During 
the  years  1863-4-5,  when  we  had  an  abundance  of  money  in 
circulation,  there  were  only  1545  failures,  amounting  to  $34,- 
103,000,  while  during  the  succeeding  eleven  years  of  contrac- 
tion there  were  67,422  failures,  amounting  to  the  vast  sum 
given  above. 

Who  can  examine  these  figures  and  not  come  to  the  con- 
clusion at  once  that  contraction  was  the  prime  cause  of  these 
bankrupteies,  and  the  governing  factor  in  this  wide-spread  de- 
struction ? 

On  January  1st,  1879,  specie  payment  was  resumed,  and 
with  it  came  the  inevitable  lessening  of  the  means  of  payment. 
Although  Congress  had  remonetized  silver  and  ordered  its 
continued  coinage,  each  Secretary  of  the  Treasury,  in  collusion 
with  banks  and  bankers,  has  succeeded  in  keeping  it  out  of  cir- 
culation up  to  the  present  time.  Every  document  coming 
from  the  Treasury  department  has  contained  a  carefully  prepared 
paper  upon  the  evils  of  silver  coinage ;  and  the  silver  dollar 
that  ought  to  be  controlled  by  and  belong  to  the  people, 
has  never  had  a  friend  in  any  administration  since.  Every- 
thing is  being  done  to  add  to  the  coinage  of  gold,  while  every 
obstacle  possible  is  thrown  in  the  way  of  the  coinage  of  silver. 

Congress  passed  an  act  permitting  the  issue  of  silver  cer- 
tificates upon  deposits  of  silver  with  the  Treasurer,  and  after 


PKICE  AND  ITS  RELATION  TO  BUSINESS.  121 

repeated  insults  from  the  banks,  in  a  lucid  interval,  passed  an- 
other act  that  no  Kational  Bank  should  belong  to  a  clearing 
house  that  would  not  receive  these  silver  certificates  in  settle- 
ment of  balances.  This  law  the  JS'ew  York  and  other  banks 
in  large  cities  have  persistently  ignored.  In  order  to  assist  in 
the  evasion  of  the  law  the  Secretary  of  the  Treasury  resorts 
to  the  following  scheme  as  shown  by  one  of  the  leading  jour- 
nals. The  local  editor  of  the  Xew  York  Tribune,  a  paper 
which  has  been  distinguished  for  its  zeal  in  supporting  the  re- 
fusal of  the  banks  to  receive  silver  certificates,  gives  in  that 
paper  of  February  11th,  the  following  account  of  the  motives 
of  the  banks  in  seeming,  on  the  9th,  to  have  relaxed  in  their 
exclusion  of  silver : 

"It  is  understood  that  the  Monday  payment  by  the  Sub- 
Treasury  was  intended  to  accomplish  tvro  objects — to  soothe  any 
jealousy  on  the  part  of  country  banks  and  to  enable  the  Sec- 
retary of  the  Treasury  to  answer  satisfactorily  the  congress- 
ional inquiry  whether  any  National  Banks  or  clearing-house 
associations  refused  to  accept  silver  or  silver  certificates.  As 
tlie  Xew  York  clearing  house  has  now  accepted  silver  in  pay- 
ment of  balances  Ijoth  it  and  the  Sub-Treasury  have  complied 
with  the  Federal  law.  It  is  generally  understood  by  bank 
ofiicers  that  payment  in  silver  will  not  be  repeated  except  in 
cases  of  emergency." 

In  issuing  bonds  under  the  act  of  July  14,  1S70,  the 
United  States  took  the  risk  of  a  rise  in  the  value  of  both  the 
metals.  The  parties  accepting  the  bonds  took  the  opposite 
risk  of  a  fall  in  the  value  of  either  of  them.  The  chances 
against  the  United  States  were  wars  and  political  disturbances 
in  the  mining  countries,  such  as  caused  a  decrease  in  the  pro- 
duction of  gold  and  silver  between  1S09  and  1S48,  or  that  the 
mines  would  be,  from  any  other  cause,  less  productive,  or  that 
countries  not  -using  gold  or  silver  might  decree  their  use  as 
money,  and  thus  make  a  new  demand  for  them,  or  that  a 
change  of  fashion  miglit  increase  the  consumptio-n  of  the 
metals  in  the  arts.     Either  of  these  circumstances,  or  all  com- 


122  PHILOSOPHY     OF     PRICE. 

bined,  might  raise  the  value  of  tlie  inetals  very  materiallj. 
On  their  part,  tliose  who  accepted  the  bonds  took  the  risks  of 
an  increased  production  of  either  or  both  of  the  inetals  by  the 
discovery  of  new  gold  and  silver  mines,  or  by  the  more  vigor- 
ous working  of  old  mines,  or  that  commercial  countries  might 
demonetize  oiie  or  hoth  of  the  metals,  or  that  great  amounts  of 
gold  or  silver  might  be  liberated  by  the  suspension  of  specie 
payments  in  important  countries,  or  that  the  habits  of  the 
world  might  be  so  changed  that  less  amounts  of  gold  or  silver 
would  be  used  for  other  purposes  than  as  money.  Either  of 
these  circumstances,  or  all  combined,  might  depreciate  tli/e 
value  of  one  or  both  of  the  metals  very  materially. 

One  fact,  not  a  matter  of  chance  but  of  reasonable  cer- 
tainty, operates  steadily  against  the  United  States.  This  is  the 
advance  of  the  world  in  population,  wealth,  and  exchanges, 
and  the  consequent  requirement  of  more  money,  with  no  cer- 
tainty that  the  mines  will  produce  more. 

The  risks  were  and  are  m.utual.  Is  it  supposable  that, 
upon  the  occurrence  of  any  or  all  of  the  circumstances  which 
would  tend  to  raise  the  value  of  both  metals,  and  thereby  in- 
crease the  burdens  of  tlie  obligations  payable  in  them,  the 
United  States  would  ask  or  that  the  bondholder  would  agree 
to  a  corresponding  scaling  of  the  contract?  Has  a  bargain 
been  made  where  the  creditors,  under  all  vicissitudes,  stand  to 
win  and  not  to  lose  ?  Is  the  United  States  bound  to  the  obliga- 
tions and  penalties  of  the  contract,  and  debarred  from  all  the 
advantages  conferred  by  its  term.s  ?  These  interrogatories  ad- 
mit of  but  one  reply. 

There  is  no  dispute  about  the  facts  of  the  case,  or  the 
law.  A  contract  has  been  entered  into  between  the  govern- 
ment and  its  creditors  involving  contingencies  which  may  fa- 
vor either  party,  and  both  parties  must  abide  the  issue,  what- 
ever it  may  be.  It  would  be  beneath  the  dignity  of  the 
Government  to  dem.and  axiy  advantages  of   the  Government 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  1  23 

which  the  law  and  tlie  contract  made  under  it  do  not  confer. 
It  would  be  a  violation  of  justice  and  a  betrayal  of  tlie  great 
interests  confided  to  its  charge  to  accept  anything  less.  The 
Government  is  an  agent  and  not  a  principal.  It  is  the  trustee 
of  the  nation,  and  must  find  the  charter  and  guide  for  the  ad- 
ministration of  the  affairs  intrusted  to  it  in  the  law  and  not  in 
sentimental  emotions. 

The  creditor  would  have  no  reason  to  complain  of  the  laAV 
or  the  fact  if  he  were  now  paid  in  silver.  The  contingencies 
which  have  happened  have  not  been  favorable  to  tlie  United 
States,  but  otherwise.  Not  only  has  the  value  of  both  the 
metals  risen,  but  a  comparison  of  gold  prices  in  1870  with  sil- 
ver prices  in  1885  will  show  that  the  value  of  silver  in  buy- 
ing the  products  of  labor  is  now  greater  than  the  value  of 
gold  was  then.  Payment  to-day  in  silver  would  not  only  give  the 
creditor  all  he  is  entitled  to  under  the  law  and  the  contract,. 
but  would  mete  out  to  him  more  than  equity  would  demand. 

It  is  somietimes  said  that  the  more  recently  issued  bonds 
should  be  paid  in  gold,  because  the  United  States  received 
gold  for  them.  The  obligations  of  a  bond  are  not  governed 
by  the  price  or  the  species  of  money,  or  tlie  nature  of  the  con- 
sideration received  by  those  who  issued  it.  They  are  governed 
by  the  terms  of  the  bond,  and  not  by  what  it  is  sold  for.  A 
bond  sold  at  105  can  have  no  other  construction  than  a  similar 
bond  sold  at  50,  and  a  bond  sold  for  gold  can  have  no  other 
construction  than  a  similar  bond  sold  for  silver  or  greenbacks, 
or  given  in  payment  for  supplies  and  services.  The  promise, 
and  not  the  consideration,  govei'ns.  If  it  were  really  true  that 
•what  is  received  for  bonds  determines  M-liat  they  pi-omise,  the 
holders  of  a  majority  of  the  outstanding  bonds  of  the  United 
States  would  be  in  a  much  less  favorable  position  than  they 
now  occupy. 

In  consequence  of  this  war  on  silver,  a  large  sum  lies  idle 
in  the  vaults  of  the  national  Treasury,  with  a  fixed  detemiina- 


124:  PHILOSOPHY     OF    PRICE. 

tiou  on  tiie  part  of  the  Secretaiy  and  tlie  Government  that  not 
one  dollar  shall  be  paid  for  the  redemption  of  bonds.  The 
plea  of  unfairness  is  made,  that  silver  has  depreciated  in  value, 
and  is  now  at  a  discount  compared  to  gold.  With  a  hundred 
millions  or  more  of  bonds  subject  to  call,  which  should  be 
paid,  thereby  putting  into  circulation  the  same  amount  of  cur- 
rency, and  relieving  the  Xation  of  the  interest  on  that  amount 
of  bonds,  all  this  vast  sum  is  held  idle  in  the  Treasury  because 
the  bondholders  control  the  administration. 

Let  us  go  to  the  facts  and  ascertain  whether  these  bonds 
can  be  honorably  paid  in  silver.  The  law  passed  February  25, 
1862,  provides  that  coin,  and  coin  alone,  shall  be  received  for 
customs  dues.  That  law  has  never  been  changed.  It  also  pro- 
vides for  the  disposal  of  the  coin  so  received  as  follows  : 

"Section  3694. — The  coin  paid  for  duties  on  imported 
goods  shall  be  set  ajmrt  as  a  special  fund,  and  shall  be  applied 
as  follows : 

First — To  the  pa3'ment  in  coin  of  the  interest  on  the 
bonds  and  notes  of  the  United  States. 

Second — To  the  purchase  or  payment  of  one  per  cent,  of 
the  entire  del)t  of  the  United  States,  to  be  made  within  each 
fiscal  year,  which  is  to  be  set  apart  as  a  sinking  fund,  and  the 
interest  of  which  shall  in  like  manner  be  applied  to  the  pur- 
chase or  payment  of  the  public  del)t,  as  the  Secretary  of  the 
Treasury  shall  from  time  to  time  direct. 

Third — T]ie  residue  to  be  paid  into  the  Treasury. 

Since  the  passage  of  the  above-mentioned  act,  millions  of 
silver  has  Ijeen  received  into  the  Treasury  from  customs,  and 
not  one  dollar  of  it  applied,  as  the  law  directs,  in  the  purchase 
or  payment  of  bonds,  while  the  act  expressly  provides  for  the 
payment  of  one  per  cent,  each  year,  of  the  entire  del)t  with 
this  coin. 

In  1870,  when  our  present  bonds  were  issued,  they  were 
sold  in  accordance  witli  the  f ollowinor  act  of  Conofress : 

''  Chap.  256. — An  Act  to  Authorize  the  Refundinq  of 

THE  XaTK>NAL  DedT. 

Be  it  enacted  hy  the  Senate  and  House  of  Representatives 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  125 

of  th-e  United  States  of  Amet'ica  in  Congress  assenibhd^  That 
the  Secretary  of  the  Ireasiiry  is  hereby  authorized  to  issue,  in 
a  sum  or  sums  not  exceeding  in  the  aggregate  two  hundred 
million  dollars,  coupon  or  registered  bonds  of  the  United 
States,  in  such  form  as  he  may  prescribe,  afid  of  denomina- 
tions of  fifty  dollars,  or  some  multiple  of  that  sum,  redeemahle 
in  coin  of  the  present  stiindard  value,  at  the  pleasure  of  the 
United  States,  after  ten  years  from  the  date  of  their  issue,  and 
bearing  interest,  payable  semi-annually  in  such  coin,  at  the  rate 
of  five  per  cent,  per  annum ;  also  a  sum  or  sums  not  exceed- 
ing! in  the  aggregate  three  hundred  million  dollars  of  like 
bonds,  the  same  in  all  respects,  but  payable  at  the  pleasure  of 
the  United  States,  after  fifteen  years  from  the  date  of  their 
issue,  and  bearing  interest  at  the  rate  of  four  and  ahalf  per 
cent  per  annum ;  also  a  sum  or  sums  not  exceeding  in  the  ag- 
gregate one  thousand  million  dollars  of  like  bonds,  the  same  in 
all  respects,  but  payable  at  the  pleasure  of  the  United  States, 
after  thirty  years  from  the  date  of  their  issue,  and  bearing 
interest  at  the  rate  of  four  per  cent  per  annum  ;  all  of  which 
said  several  classes  of  bonds  and  the  interest  thereon  shall  be 
exempt  from  the  payment  of  all  taxes  or  duties  of  the  United 
States,  as  well  as  from  taxation  in  any  form  by  or  under  state, 
municipal  or  local  authority ;  and  the  said  bonds  shall  have  set 
forth  and  expressed  upon  their  face  the  above  specified  condi- 
tions, and  shall,  with  their  coupons,  be  made  payable  at  the 
Treasury  of  the  United  States.  But  nothing  in  this  act,  or  in 
any  other  law  now  in  force,  shall  be  construed  to  authorize  any 
increase  whatever  of  the  bonded  debt  of  the  United  States." 

This  is  section  first  of  the  act  approved  July  14,  1S70. 
Can  language  be  plainer  than  this  ?  Notice  the  express  pro- 
vision, "redeemable  in  coin  of  the  present  standard  value." 
What  was  the  standard  value  of  silver  then?  412  1-2  grains, 
the  same  as  now.  But  for  further  proof  I  give  below  the  exact 
wording  of  the  lond  itself.  This  wording  is  on  the  original 
and  all  subsequent  renewals : 

"This  bond  is  issued  in  accordance  with  the  provisions  of 
an  act  of  Congress  entitled  '  An  act  to  authorize  the  refunding 
of  the  national  debt,'  approved  July  14,  1870,  as  amended  by 
an  act  approved  January  29,  1871,  and  is  redeemable  at  the 
pleasure  of  the  United  States  after  the  first  day  of  July,  190J, 
in  coin  of  the  standard  value  of  the   United.  States  on  said 


126  PHILOSOPHY  OF    PRICE? 

Jidy  14-.  ISTO,  vnth  ivterest  in  svch  coin  from  the  day  c»f  the 
date  hereof  at  the  rate  of  four  per  cent  per  annum,  payable 
quarterly,  on  the  first  day  of  October,  January,  April  and  July 
in  each  year.  The  principal  and  interest  are  exempt  from  the 
payment  bf  all  taxes  or  duties  of  the  United  States,  as  well  as 
from  taxation  in  any  form  by  or  under  state,  municipal,  or  local 
authority. 

Washington,  July  1,  1ST7." 

The  act  creating  the  bond,  as  well  as  the  bond  itself,  specif- 
ically declares  that  coin  of  the  standard  value  of  1870  shall  be 
the  standard  of  payment.  The  contract  was  changed  in  1875, 
but  restored  to  its  original  conditions  in  1878.  Since  that  time 
we  ha\'e  had  a  double  standard  of  payment  in  fact,  but  only 
one  in  practice.  From  a  recent  report  of  the  Secretary  of  the 
Treasury  I  clip  the  following : 

"Although  the  act  of  July  14,  1870,  provides  for  the  issue 
of  United  States  bonds,  ''  redeernaljle  in  coin  of  the  y>?Y\v^ri# 
standard  valve,''  whereby  were  included  both  gold  and  silver 
coin  of  that  value,  yet  as  by  the  act  of  Feb.  12,  1873,  the  fur- 
ther coinage  of  silver  dollars  was  prohibited,  and  the  revised 
statutes  declared  gold  coin  only  to  be  for  sums  exceeding  five 
dollars,  equity,  if  not  strict  construction  of  law,  ref[uires  that 
the  holders  of  such  bonds  should  receive  payment  therefor  in 
gold  or  its  equivalent." 

The  above  statement  of  the  Secretary  of  the  Treasury 
falls  fiat  when  we  consider  the  fact  that  the  law  of  1873  did 
not  demonetize  the  silver  dollar,  but  simply  stopped  its  coinage. 
The  act  of  June  22,  1875,  sections  3585  and  3586  took  from  it 
its  legal  tender  properties. 

Beginning  with  the  date,  June  22,  1875,  and  tracing  the 
laws  to  February  28,  1878,  when  silver  was  remonetized,  the 
amount  of  bonds  sold  under  the  act  referred  to,  was ;  5  per 
cent  bonds,  due  1881,  $150,216,950 ;  4  1-2  per  cent  bonds,  due 
1891,  $140,000,000. 

Of  this  amount  the  bonds  due  in  1881  have  all  l)een  paid 
or  reissued  in  some  other  form.  Of  the  bonds  due  in  1891 
there  is  only  a])out  $128,000,000  outstanding.     From  these  fig- 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  127 

ures  we  can  discern  the  last  flimsy  foundation  upon  which  the 
advocates  of  a  single  gold  standard  of  payments  base  their 
arguments. 

Hon.  Edwards  Pierrepont,  Attorney  General  of  the  Unit- 
ed States,  and  Minister  to  England,  in  a  letter  to  the  Kew 
York  Times  of  April  IS,  1SS4,  says : 

'•There  is  not  an  outstanding  bond,  coupon  or  greenback 
issued  by  the  United  States  which  may  not  he  lawfully  paid  in 
silver.  Not  one  of  them  on  its  face  or  back,  or  in  the  statute 
authorizing  the  issue,  or  in  declaration,  or  in  resolution  of  Con- 
gress, has  any  proviso  that  they  shall  be  paid  in  gold.  And 
the  act  of  Feb.  28,  1S7S,  directing  the  coinage  of  silver  dol- 
lars, declared  that  such  dollars  shall  be  a  legal  tender  at  their 
nominal  value  for  all  debts  and  dues,  public  and  private,  except 
where  otherwise  expressly  stipulated  in  the  contract." 

The  most  conclusive  e^'idence  of  all  is  in  the  followino: 
resolution.  This  completely  explodes  the  idea  of  a  single 
standard  of  gold  in  payment  for  bonds. 

The  following  resolution  passed  the  United  States  Senate 

January  25,  1878,  and  the  House  of  Kepresentatives  January 

28,  1878,  by  a  vote  of  42  to  20  in  the  Senate  and  189  to  79  in 

the  House: 

"That  all  the  bonds  of  the  United  States  issued  or  author- 
ized to  ])e  issued  under  the  said  acts  of  Congress  hereinl^ef ore 
recited  are  payal)le,  principal  and  interest,  at  the  option  of  the 
government  of  the  United  States,  in  silver  dollars  of  tlie  coin- 
a2"e  of  the  United  States,  containint;  412  1-2  trains  each  of 
standard  silver ;  and  that  to  restore  to  its  coinage  such  silver 
coins  as  a  legal  tender  in  payment  of  said  bonds,  jorincipal  and 
interest,  is  not  in  violation  of  tlie  public  faitli  nor  in  deroga- 
tion of  the  rights  of  the  pu])lic  creditor." 

It  is  both  interesting  and  instructive  to  examine  the  list  of 
those  votini?  for  and  ao-ainst  the  resolution  then  and  note  their 
positions  at  this  time. 

Neither  do  I  believe  there  is  a  bond  or  debt  of  any  de- 
scription against  this  Government  bearing  interest,  l)ut  can  be 
called  in  at  any  time  and  paid.     I  hold  it  to  be  the  duty  of  this 


128  PHILOSOPHY     OF     PRICE. 

Government  to  call  in  any  of  tliese  bonds  and  rid  the  treasury 

of  its  surplus  in  their  payment.     "What  is  the  meaning  of  the 

following  quotations,  if  it  does  not  convey  that  power  ? 

In  the  Credit-Strengthening  act,  passed  March  18, 1869,  it 

is  provided  as  follows : 

"  But  none  of  said  interest-bearing  obligations  shall  be  re- 
deemed or  paid  before  maturity,  unless  at  such  time  United 
States  bonds  shall  be  convertible  into  coin  at  the  option  of  the 
holder,  or  unless  at  such  time  bonds  of  the  United  States  bear- 
ing a  lower  rate  of  interest  than  the  bonds  to  be  redeemed  can 
be  sold  at  par  in  coin," 

It  may  be  urged  that  this  language  refers  solely  to  the 
currency  sixes.  Granting  this  for  the  sake  of  argument,  we 
find  in  Sec.  3,693  of  the  Revised  Statutes  the  following  pro- 
vision : 

"  But  none  of  the  interest-bearing  obligations  not  already 
due  shall  be  redeemed  or  paid  before  maturity,  unless  at  such 
time  United  States  notes  are  convertible  into  coin  at  the  option 
of  the  holder,  or  unless  at  such  time  bonds  of  the  United  States 
bearing  a  lower  rate  of  interest  than  the  bonds  to  be  redeemed 
can  be  sold  at  par  in  coin." 

A  recent  writer  says : 

"If  this  language  means  anything,  it  means  that  Congress 
then  recognized  the  fact,  which  no  one  will  seriously  dispute, 
that  the  Government  had  the  undoubted  right  to  pay  its  bonded 
indebtedness  at  any  time.  But,  owing  to  the  peculiar  condi- 
tion of  the  currency  at  that  time.  Congress  provided  by  a  sol- 
emn pledge  that  it  would  not  exercise  this  right  until  the  con- 
ditions named  existed.  Both  conditions  now  exist.  United 
States  notes  are  exchangeable  for  coin  at  par,  and  bonds  bear- 
ing a  lower  rate  of  interest  than  the  bonds  to  be  redeemed  can 
be  sold  at  par  in  coin.  It  follows  that  a  strict  construction  of 
the  law  under  which  these  bonds  were  issued  fully  warrants 
their  payment  at  any  time.  If  it  is  urged  that  it  would  cause 
loss  to  the  holders  of  the  bonds;  the  answer  is  that  such  holders 
liad  full  knowledge  of  the  law,  and  also  that  the  Government 
owes  to  the  debtor  class,  and  to  the  people  generally,  just  as 
much  care  and  fidelity  as  it  owes  to  the  bondholders." 

It  is  asserted  in  the  Secretary's  report  that  one  of  the  con- 


PKICE  AND    ITS    RELATION  TO     BUSINESS.  129 

sequences  of  the  payment  by  the  Government  of  all  its  debts 
in  silver  v/ould  be  the  impairment  of  the  national  credit,  al- 
though no  explanation  is  given  how  a  refusal  to  pay  gold  can 
injure  the  character  of  a  country  which  has  never  promised  to 
pay  gold,  and  which  has  a  law  on  its  statute-books  admonishing 
everybody  who  deals  with  it  that  the  standard  silver  dollar  is, 
and  shall  be,  a  tender  for  everything  which  it  owes,  unless  it  is 
^'  otherwise  expressly  stipulated  in  the  contract." 

The  Economist  says  "  nearly  every  nation  on  the  face  of 
the  globe  is  indebted  to  us,  and  the  result  of  an  appreciation 
of  gold  is  that  we  obtain  a  larger  quantity  of  their  commodi- 
ties "  in  settlement  of  our  claims. 

H.  H.  Gibbs,  an  ex-governor  of  the  Bank  of  England, 
says  in  an  article  in  the  British  National  Review  for  July,  1883, 
that  the  following  ideas  being  precisely  those  of  the  Econo- 
mist, are  constantly  pressed  upon  the  English  public : 

"England  is  a  creditor  nation.  The  scarcity  of  gold  has 
made  that  metal  more  valualjle,  and  she  must  needs  be  the 
gainer  by  this,  and  must  continue  to  ])e  still  more  the  gainer  if 
gold  becomes  scarcer  still.  Is  it  to  be  expected  that  she  should 
throw  away  this  advantage  ? " 

The  same  reasons  which  make  gold  monometalism  a  favor- 
ite policy  in  England  make  it  a  favorite  policy  in  every  coun- 
try, and  in  every  section  of  all  countries  in  which  the  creditor 
classes  are  dominant.  Quite  as  naturally  it  is  not  a  favorite 
policy  in  countries  and  sections  of  countries  which  are  heavily 
loaded  with  public,  corporate  and  private  debts. 

The  honor  of  the  Government  was  no  more  sacredly 
pledged  to  the  bondholder,  that  the  principal  and  interest  of 
bonds  issued  under  the  act  of  July  14,  1870,  should  be  paid  in 
coin  of  the  standard  value  of  that  date,  than  it  was  to  the  peo- 
ple that  they  should  have  the  option  and  privilege  of  paying 
the  bonds  issued  under  that  act  in  either  of  the  classes  of  coin 
of  the  standard  value  of  that  date.  There  are  two  parties  to 
these  contracts,  the  bondholder  on  the  one  side  and  the  masses 


13U  IllILOSOrKY    OF    PRICE. 

of  the  people  on  the  other.  The  rights  of  the  one  are  as  sacred 
as  tlie  rights  of  the  other. 

Even  Great  Britain,  for  many  years  during  the  present 
centnry,  paid  the  interest  of  its  public  debt,  a  large  proportion 
of  which  had  been  contracted  in  coin,  in  inconvertible  bank 
notes,  whose  depreciation  sometimes  reached  as  high  as  thirty 
per  cent.  "While  nearly  all  nations  have,  on  various  occasions, 
n^et  their  obligations  in  a  money  less  valuable  than  they  agreed 
to  pay,  the  Government  of  the  United  States  stands  alone  and 
pre-eminent  in  the  generosity  and  in  the  folly  of  paying  in  a 
money  more  valuable  than  it  agreed  to  pay.  The  only  oom- 
pensation  which  it  has  received  for  the  added  burdens  thrown 
upon  its  citizens  by  an  over-performance  of  its  contracts  is  the 
interested  praise  of  those  benefited,  which  is  as  insincere  as  it 
is  interested.  Those  who  obtain  an  unjust  advantage  have  a 
real  contempt,  however  concealed,  for  the  weakness  that  con- 
cedes and  allows  it.  That  sensitiveness  so  morbidly  manifested 
by  some  in  respect  to  the  estimation  in  which  this  Government 
may  be  held  by  its  creditors,  here  and  abroad,  and  their  indif- 
ference as  to  the  estimation  in  which  it  shall  be  held  by  the 
great  mass  of  its  own  citizens,  instead  of  being  the  evidence  of 
proper  national  pride,  is  an  exhibition  of  weak  and  puerile 
vanity.  That  sentimental  idea  of  honor  which  requires  the  ab- 
rogation of  the  plain  terms  of  a  written  contract  by  one  of  the 
parties  to  it,  against  its  own  interest  and  at  the  demand  of  the 
other  party,  while  suited  to  youthful  fancy,  and  refreshing  in 
the  pages  of  cheap  literature,  should  find  no  place  in  ofiicial 
interpretations  defining  the  rights  and  duties  of  a  nation  under 
contracts  whose  written  terms  are  so  precise  as  to  exclude  im- 
plication, and  were  framed  by  etninent  patriots  who  had  the 
welfare  of  the  nation  always  at  heart. 

Senator  Beck  in  a  recent  speech  placed  this  idea  in  a  con- 
vincing light : 

"  There  is  no  more  effectual  or  pernicious  method  of  con- 


PKICE    AND    ITS    RELATION    TO    BUSINESS.  131 

tracting  the  currency  tlian  by  collecting  by  taxation  a  large 
sum  in  excess  of  the  needs  of  an  economically  administered 
Government,  and  locking  it  up  in  the  Treasury.  Every  dollar 
needlessly  taken  from  the  tax-payer,  wrongfully  deprives  him 
of  that  nmch  capital  which  he  needs  and  labored  to  obtain,  and 
when  it  is  locked  up,  the  circulating  medium,  which  all  the 
people  want,  is  wrongfully  withheld  from  them.  The  thief 
Avho  steals  and  squanders  an  unneeded  surplus  locked  up  in  the 
Treasury  vaults  would  intlict  less  injury  on  the  country  and  its 
business  if  the  money  he  stole  was  put  in  circulation,  than  a  Secre- 
tary who  holds  and  hides  in  vaults  currency  which  the  people 
want  and  refuses  to  use  it  to  pay  the  debts,  especially  interest-bear- 
ing debts,  which  the  men  who  own  this  money  owe.  It  is 
easy  to  raise  a  clamor  about  a  surplus,  but  it  will  be  more  dif- 
ficult to  explain  to  the  people  why  such  vast  amounts  of  the 
money  they  have  been  so  heavily  taxed  to  furnish  is  lying  idle 
in  the  overloaded  Treasury  vaults,  and  they  deprived  of  its  use, 
while  interest  is  running  against  them  on  bonds  which"  can  be 
anid  ought  to  be  paid.  The  idle  money  when  paid  out  for  in- 
terest on  bonds  would  at  once  be  released  and  restored  to  cir- 
culation." 

The  Senator  continues  his  remarks  on  this  cpiestion  fur- 
ther.    He  says : 

"If  the  gold  mines  of  California  and  Australia  had  con- 
tinued to  produce  abundantly,  and  the  Comstock  lode  and  the 
Leadville  mines  had  not  produced  silver,  so  that  the  market 
value  of  the  two  metals  as  bullion  in  London  had  been 
reversed,  the  argument  could  be  made  quite  as  plausibly  that 
the  silver  dollar  was  the  constitutional  unit  of  value  in  1870, 
which  the  bondholders  have  a  right  to  demand. 

There  is  not  an  outstanding  obligation  of  the  United 
States,  nor  of  any  state,  municipality,  corporation,  or  individ- 
ual, which  can  not  be  legally  and  lionorably  discharged  by  tlie 
pajnient  of  the  present  standard  silver  dollar.  What  right  lias 
Congress  to  deprive  the  debtor  of  that  right  by  adding  more 
silver  to  the  coin  than  he  agreed  to  pay,  or  by  stopping  its  coinage 
so  that  he  can  not  obtain  it  ?  It  is  as  palpable  a  viokition  of 
a  contract  to  increase  the  obligation  of  the  debtor  as  it  is  to 
impair  or  reduce  the  standard  value  of  the  coin  which  the 
creditor  stipulated  in  his  contract  should  be  paid  to  him.  I 
repeat :  Why  should  it  be  stricken  down,  or  its  ])urchas- 
ing  power  further  increased  20  per  cent,  by  adding  40,  50,  or 
any  other  number  of  grains  to  its  weight  ?     In  other  words, 


132  PHILOSOPHY  OF  PRICE. 

why  should  every  producer  and  debtor  have  to  give  20  per 
cent,  more  of  the  products  of  his  labor  to  ol)tain  either  a  new 
silver  dollar  or  gold  coin  with  which  to  pay  his  debts  than  he 
does  now,  when  he  is  already  paying  his  obligations  according 
to  the  terms  of  his  contract  in  a  coin  which  will  procure  for  its 
owner  much  more  of  all  he  needs  than  it  would  in  1870  ?  It 
is  only  another  phase  of  the  constant  struggle  of  the  rich  to 
grind  the  faces  of  the  poor,  and  of  the  favored  few  to  enrich 
themselves  by  class  legislation. 

While  no  one  can  deny  that  every  obligation  of  the  Unit- 
ed States  and  every  contract  within  our  own  borders  can  he 
discharged  honorably  with  the  present  silver  dollar,  we  are  told 
that  our  foreign  obligations  and  relations  are  such  that  gold 
will  be  at  a  premium  very  soon,  and  we  will  be  on  a  ])asis.of 
degraded  silver  at  once  if  we  do  not  increase  the  weight  or  stop 
the  coinage  of  silver ;  that  all  Europe  is  horrified  at  our  stupid- 
ity or  dishonesty,  or  both. 

Fortmiately  the  official  reports  overthrow  all  the  reckless 
assertions  of  the  gold  worshipers.  The  Register  of  the  Treas- 
ury (see  report  for  this  year,  page  4),  shows  that  out  of  $1,- 
071,460,262  registered  bonds  of  tlie  United  States  outstanding 
only  $11,927,900,  or  a  little  over  one-tenth  of  1  per  cent,  is 
held  al)road,  and  of  those  which  can  be  paid  before  1892,  for- 
eigners hold  only  ^34,150,  which  is  less  than  the  interest  on 
the  money  now  lying  idle  in  the  Treasury  for  one  day  at  3  per 
cent,  per  annum. 

These  facts,  coupled  with  the  fact  that  our  exports  of 
goods  exceeded  our  imports  §130,000,000  this  year,  and  our 
imports  of  gold  exceeded  our  gold  exports  $18,213,804,  an 
amount  greatly  exceeding  all  our  l)oiids  held  abroad,  settle  the 
question.  The  falsity  of  the  clamor  about  foi-eign  complica- 
tions or  gold  premiums  is  made  too  apparent  fur  any  sensible 
man  to  be  deceived  by  it. 

The  press  is  tilled  with  articles  day  l)y  day  '\diich  seek  to 
make  })e<^»plc  l)elieve  that  all  other  nations  have  ceased  to  coin 
silver,  and  that  we  alone  are  stubbornly  ])ersisting  in  forcing  it 
upon  this  country  after  it  has  been  abandoned  everywhere  else. 

I  propose  to  disprove  these  allegations  l)y  officially  stated 
facts.  The  Director  of  the  Mint  in  his  last  report  shows 
(pages  131,  132)  that  for  the  vear  1884  the  world's  production 
of  gold  was  $9.5,292,569;  of  silver,  $115,147,878 ;  and  that 
$99,459,240  of  gold  was  coined,  while  the  coinage  of  silver  last 
year  amounted  to  $90,039,443,  of  which  the  United  States 
coined  $23,991,756  of  gold,  and  $28,534,866  of  silver.     Other 


PEICE   A^:D   ITS   EELATION   TO    BUSlNEgS.  133 

nationg,  therefore,  coined  in  1S84  $61,504,577  of  silver,  show- 
ing that  we  are  far  from  being  alone  in  the  coinage  of  that 
metal.  England  coined  $3,204,824  of  silver  last  year  and  $G,- 
201,517  the  year  before,  to  add  to  her  stock  which  has  been  ac- 
cnmnlating  for  generations ;  while  she  has  coined  silver  for 
India  in  the  last  three  years  to  the  value  of  $68,234,000. 

The  w^orkers  for  wages  in  England  to-day  get  their  pay  in 
silver  coin,  and  the  question  is  never  mooted  by  them  as  to  the 
comparative  bullion  value  of  the  silver  and  gold  coin  of  that 
country.  Even  Germany,  notwithstanding  she  pretended  to 
have  demonetized  silver  twelve  years  ago,  coined  in  1882  $6,- 
407,157  of  it  to  add  to  her  vast  stock  on  hand ;  her  laborers  are 
paid  in  it  now.  No  complaint  is  made  anywhere,  here  or  in 
Europe,  about  silver  coin  except  by  the  holders  of  our  bonds, 
who  seek  to  increase  largely  the  purchasing  power  of  gold,  or^ 
which  is  the  same  thing,  reduce  the  value  of  all  our  propert}'^ 
from  25  to  50  per  cent,  below  its  present  value  when  tested  by 
the  single  standard  of  gold,  which  they  claim  shall  be  paid  1)y 
us  to  them  and  to  them  alone.  They  do  not  seek  to  establish 
the  single  gold  standard,  they  say ;  they  are  bimetal  lists. 
They  agree  that  silver  is  a  legal  tender  for  all  debts  and  obli- 
gations of  the  Government,  except  those  held  by  them.  It  is 
good  enough  to  pay  the  laborer,  the  soldier,  the  sailor,  in  short, 
all  who  work  for  the  United  States,  but  they  insist  that  it  is 
dishonest  in  us  to  pay  it  to  them,  although  their  bonds  and  ob- 
ligations all  show  on  their  face  that  it  is  a  legal  tender  in  pay- 
ment of  them  all  so  long  as  it  is  coined  of  the  standard  value 
fixed  by  law,  July  14,  1870,  as  it  is  now  and  always  has  been. 

Our  dollar  is  more  valuable  than  that  coined  by  most  of 
the  other  leading  nations,  France  included,  theirs  bearing  the 
relation  of  15  1-2  to  1  with  gold,  while  ours  is  16  to  1.  I  need 
not  repeat  in  detail  what  the  official  reports  show  in  regard  to 
the  gold,  silver,  and  paper  currency  of  the  several  countries. 
It  is  sufficient  to  prove  by  them  that  while  the  difference  in 
the  market  value  of  gold  and  silver  in  Lomlon  operates  to  de- 
grade their  silver  coin  more  than  it  does  ours,  France  and  other 
countries  maintain  their  silver  and  paper  in  all  transactions, 
public  and  private,  at  par  with  gold  under  far  greater  difficulties 
than  we  have  to  contend  wnth,  no  matter  from  what  stand- 
point the  comparison  is  made."  / 

All  that  is  now,  or  ever  has  been  necessary  to  keep  siJvei* 

where  it  belongs  and  in  its  proper  ratio  with  geld  is  for  the 

officers  of  the  Government  to  obey  the  law.     Let  them  say  to 


/ 


134  PHILOSOPHY    OF    PKICE, 

the  bondholders,  here  is  coined  silver  of  the  required  fineness 
and  weight ;  take  it.  in  payment  for  your  bonds.  It  is  all  you 
can  legally  or  morally  ask,  as  it  is  strictly  in  accordance  with 
the  bond  you  compelled  us  to  give.  When  this  is  done,  and 
these  patriotic  gentlemen  known  as  the  nation's  creditors,  are 
made  to  understand  that  in  the  near  future  they  will  be  the 
owners  of  this  ta1)Ooed  silver  dollar,  the  cry  against  silver  coin- 
iiire  will  cease,  and  this  howl  about  a  Imzzard  dollar  will  be 
lieard  only  as  an  echo  from  foreign  lands.  This  war  is  not 
made  against  silver,  1)ut  against  the  quantity  of  money  in  the 
hands  of  the  people,  and  for  the  purpose  of  restricting  the 
means  of  i)ayment  now  within  the  reach  of  the  debtor  class  of 
our  citizens.  When  we  understand  this  truth,  all  the  acts  of 
Congress  which  have  ])een  directed  by  our  moneyed  men  will 
be  made  i)lain.  They  want  the  volume  of  currency  reduced, 
well  knowing  that  the  value  of  what  remains  will  be  enhanced. 
Tliere  is  another  factor  which  has  aided  in  the  contraction 
of  our  currency,  to-wit :  The  continued  attacks  upon  it  by  the 
banks  and  capitalists,  and  their  constant  harping  against  the  con- 
stitutionality of  the  legal-tender  greenl)ack.  These  persistent 
assaults  upon  the  greenl)ack  led  to  a  trial  in  the  Supreme 
(k)urt  of  the  United  States  of  the  legality  of  their  issue,  with 
the  following  result  as  reported  by  the  Associated  Press  : 

DECISION  OF    THE  SUPREME  COURT. 

"Washington,  March  P>,  ISS-i. — A  decision  was  rendered  by 
tlio  Su])reme  Court  of  the  United  States  to-day  in  the  long 
pending  legal  tender  case  of  Augustus  D.  Jilliard  vs.  Thomas 
S.  Greenman,  brought  here  by  writ  of  error  from  the  Circuit 
Cotii-t  of  the  United  States  for  the  southern  district  of  New 
■^'ork.  The  question  presented  ])y  this  case  as  stated  by  the 
(/ourt  is,  '  whether  notes  of  the  United  States  issued  in  time  of 
war  under  acts  of  Congress  declaring  them  to  be  legal  tender 
in  jjayinont  of  private  del)ts,  and  afterward,  in  time  of  peace, 
roflce'ined  and  paid  in  gold  coin  at  the  treasury,  and  then  reis- 
sued und(!r  the  act  of  1878,  can  under  the  constitution  of  the 
United  States  be  legal  tender  in  payment  of  such  de])ts.' 


\ 


PEICE  AND  ITS  RELATION  TO  BUSIME6S.  135 

The  Court  is  unanimously  of  opinion  that  tlie  present  case 
cannot  be  distinguished  in  principle  from  cases  heretofore  de- 
cided and  reported  under  the  names  of  '  legal  tender  cases '  (12 
Wall  457)  'Dooly  'VS.  Smith'  (13  Wall  604),  'railroad  company 
■vs.  Johnson'  (15  Wall  195),  and  'Maryland  vs.  railroad  com- 
pany '  (22  Wall  105),  and  all  the  justices  except  Justice  Field, 
who  adheres  to  the  views  expressed  in  his  dissenting  opinion 
in  those  cases,  are  of  opinion  that  they  were  rightly  decided. 
The  Court  holds,  therefore,  that  Congress  has  power  to  issue 
obligations  of  the  United  States  in  such  form  and  to  impress 
upon  them  such  qualities  as  currency  for  the  purchase  of  mer- 
chandise and  payment  of  debts  as  accord  with  the  usage  of  a 
sovereign  government.  Tlie  power  as  incident  to  power  of 
borrowing  money,  and  issuing  Ijills  and  notes  of  the  govern- 
ment for  money  borrowed,  of  imposing  upon  those  bills  or 
notes  the  quality  of  being  legal  tender  for  the  payment  of  pri- 
vate debts,  w^as  a  power  universally  understood  to  belong  to 
sovereignty  in  Europe  and  America  at  the  time  of  the  framing 
and  adoption  of  the  constitution  of  the  United  States.  This 
power  of  making  notes  of  the  United  States  legal  tender  in 
payment  of  private  debts  being  included  in  the  power  to  bor- 
row money  and  to  provide  a  national  currency,  is  not  defeated 
or  restricted  by  the  fact  that  its  exercise  may  aifect  the  value 
of  private  contracts.  If  upon  a  jast  and  fair  interpretation  of 
the  whole  constitution  a  particular  power  or  authority  appears 
to  be  vested  in  Congress,  it  is  no  constitutional  objection  to  its 
existence  or  to  its  exercise  that  property  or  contracts  of  indi- 
viduals may  be  incidentally  affected. 

The  Court  says  in  conclusion : 

Congress,  as  the  legislature  of  a  sovereign  nation,  being 
expressly  empowered  by  the  constitution  to  levy  and  collect 
taxes,  to  pay  debts  and  provide  for  the  common  defense  and 
general  welfare  of  the  United  States,  and  to  borrow  money  on 
the  credit  of  the  United  States,  and  If  coin  money  and  regu- 
late the  value  thereof  and  of  foreign  coin,  and  being  clearly 
authorized  to  coin  as  incidental  to  the  exercise  of  those  great 
powers,  to  emit  bills  of  credit,  to  charter  national  banks,  and 
to  provide  a  national  currency  for  the  whole  people  in  the 
form  of  coin,  treasury  notes  and  national  bank  bills,  and  the 
power  to  make  notes  of  the  government  a  legal  tender  in  pay- 
ment of  private  debts,  being  one  of  the  powers  belonging  to 
sovereignty  in  other  civilized  nations,  and  not  expressly  with- 
held from  Congress  by  the  constitution,  we  are  irresistibly  im- 
pelled to  the  conclusion  that  impressing  upon  treasury  notes  of 


136  rniLosoPHY  of  price. 

tlie  United  States  tlie  qui:l:tv  of  Ijeing  legal  tender  in  payment 
of  private  de])ts  is  an  appropriate  means  conducive  and  plainly 
adapted  to  execution  of  the  undoubted  power  of  Congress  con- 
sistent with  the  letter  and  spirit  of  the  constitution ;  therefore, 
within  the  meaning  of  that  instrument  necessary  and  proper 
for  carrving  into  execution  the  powers  vested  hj  this  constitu- 
tion of  theUovernment  of  the  United  States. 

Such  being  our  conclusion  in  the  matter  of  law,  the  ques- 
tion whether  at  any  time  in  \ya.Y  or  peace  the  exigency  is  such 
by  reason  of  unusual  and  pressing  demands  on  the  resources  of 
the  government  or  of  inadequacy  of  the  supply  of  gold  and 
silver  cpin  to  furnish  the  currency  needed  for  uses  of  the  gov- 
ernment and  of  the  people,  that  it  is  as  a  matter  of  fact  wise 
and  expedient  to  resort  to  this  means  is  a  political  question  to 
be  determined  ])y  Congress  when  a  question  of  exigency  arises, 
and  not  a  judicial  question  to  be  afterward  passed  upon  by  the 
courts.  It  follows  that  the  act  of  May  31, 1878,  is  constitutional 
and  valid,  and  that  the  Circuit  Court  rightly  held  that  a  tender 
in  treasury  notes  reissued  and  kept  in  circulation  under  that 
act  was  a  tender  of  lawful  money  in  payment  of  the  defend- 
ant's de])t  to  plaintiff. 

The  judgment  of  the  Circuit  Court  is  affirmed.  Opinion 
by  Justice  Grav,  JusticeField  dissenting. 

JUSTICE  FIELD  DISSENTS. 

Justice  Field,  in  a  long  and  carefully  prepared  opinion, 
dissents  from  the  opinion  of  the  Court  and  from  all  arguments 
advanced  in  its  support.     He  says: 

'  If  there  be  anything  in  the  history  of  the  constitution 
which  can  be  established  with  moral  certainty,  it  is  that  the 
framers  of  that  instrument  intended  to  prohibit  the  issue  of 
legal  tender  notes  both  l)y  the  general  Government  and  by 
states.  The  argument  presented  by  the  Court,  and  by  advocates 
of  legal  tender,  amounts  to  this:  The  object  of  borrowing  is 
t.t  i-aisc  funds;  the  annexing  of  the  quality  of  legal  tender  to 
notes  of  the  Government  will  induce  parties  to  take  them,  and 
funds  will  there1)y  be  more  readily  loaned.  But  the  same  thing 
may  ])e  said  of  tlie  annexation  of  any  other  provision  which 
would  give  to  the  holders  of  notes  some  advantage,  as  for  in- 
stance a  ])rovision  that  notes  of  the  Government  should  serve 
a.s  a  free  ticket  on  pul>lic  conveyances  of  the  country,  or  give 
free  ingress  to  i)laces  of  amusement,  or  entitle  him  to  a  per- 
centage from  the  revenue  of  private  corporations.  The  same 
consequence — a  ready  acceptance  of  notes — would  follow,  and 


PRICE  AND    ITS    RELATIOM  TO    BUSINESS.  137 

yet  no  one  wonld  pretend  that  annexation  of  provisions  of  this 
kind  with  respect  to  property  of  others,  over  whicli  the  bor- 
rower has  no  control,  would  be  in  any  sense  an  appropriate 
measure  to  the  execution  of  power  to  borrow.  There  is  no  in- 
vasion by  the  Government  of  the  rights  of  third  parties  which 
may  not  be  thus  sanctioned  under  the  pretense  that  its  allow- 
ance will  lead  to  the  ready  acceptance  of  the  Government's 
notes  and  produce  the  desirpd  loan.' 

In  conclusion  Justice  Field  says: 

'  From  the  decision  of  the  Court  I  see  only  evil  likely  to 
follow.  If  Congress  has  power  to  make  notes  of  the  United 
States  legal  tender,  and  to  make  them  pass  as  money,  it  may  be 
asked  what  necessity  was  there  to  invest  it  by  the  constitution 
with  power  to  borrow  money  i  If  it  can  make  money,  wliy 
borrow  it  ?  and  if  notes  of  the  United  States  with  the  legal 
tender  quality  are  money,  or  equivalent  to  money,  why  should 
Congress  not  at  once  issue  a  sufficient  amount  to  pay  all  bonds 
of  the  United  States?  Why  pay  interest  on  $1,0*00,000,000 
bonds  when  in  one  day  it  can  make  money  to  pay  them  ?  It 
w^ould  not  indeed  surprise  me  if  there  be  a  call  from  many 
quarters  upon  the  Government  to  issue  such  notes  for  bonds. 
Who  can  object  to  it  if  the  doctrine  declared  by  the  Court  is 
sound  ?  and  why  should  there  be  any  restraint  upon  unlimited 
appropriations  by  the  Government  for  all  imaginary  schemes 
of  public  improvement  if  the  printing  press  can  furnish  all  the 
money  needed  for  them  ? '  " 

That  Court,  the  highest  authority  in  the  land,  declares  in 
substance,  first,  that  the  Government  has  the  power  to  issue 
legal-tender  paper  money,  and  second,  that  Congress  is  the  sole 
judge  as  to  when,  and  in  what  quantity  it  may  be  issued.  This 
decision  is  the  end  of  the  whole  matter.  It  is  final.  We  have 
now  compassed  the  whole  story  of  contraction,  and  from  the 
facts  given  are  prepared  to  judge  of  the  conflict  that  began 
with  the  civil  war  and  is  raging  at  the  present  time.  When  it 
will  cease  and  what  w^ill  be  the  final  result  no  man  can  predict. 
One  thing,  however,  is  certain.  This  concentration  of  values — 
this  building  up  of  giant  monopolies — this  increasing  power  of 
wealth  over  labor  and  its  products,  cannot  continue  many 
years  and  our  nation  remain  a  free  Kepublic. 

I  will  now  proceed  to  compare  the  volume  of  domestic 


13S  PHILOSOPHY     OF     PRICE. 

currency  in  the  Lands  of  tlie  people  for  the  years  1866  and 
1885.  There  seems  to  be  a  difference  of  opinion  among  writers 
in  regard  to  these  ratios.  I  hare  made  a  thorough  investiga- 
tion of  the  pubHc  records  and  have  made  my  table  from  them 
alone.  The  task  is  a  difficult  one,  but  in  a  book  of  this  character 
it  becomes  absolutely  necessary.  I  have  given  the  amount  of  cur- 
rency among  the  people  each  year.  In  doing  so  I  have 
deducted  from  the  gross  amount  of  currency,  all  re- 
serves held  in  the  United  States  Treasury  and  the  banks. 
From  1875  to  1885  I  have  made  a  very  conservative  deduction 
f®r  lost  or  destroyed  currency.  There  has  l)een  issued  and  re- 
issued $1,610,559,947  of  U.  S.  notes,  and  nearly  double  this 
amount  of  national  bank  bills.  Of  course  there  must  have 
been  a  per  cent,  of  this  paper  money  as  well  as  coin  lost 
and  destroyed. 

The  public  de])t  statement  of  June  30,  1866,  was  as  fol- 
lows : 

Ten-forty  5  per  cent  bonds |  171,219.100.00 

Pacitic  Bouds 6,042,000.00 

Fivc-twcny  bonds  due  18824-5 722.205,500.00 

Six  KIT  cent,  bonds  due  1881 265.317,700.00 

!Si.\  i)er  cent,  bonds  due  1830 18,415,000.00 

Five  per  cent.  bond,s  due  1874 20  000,000.00 

Five  per  cent,  bonds  due  1871 7.022,000.00 

'i\Tuporary  ten-day  loan 120,176.195.65 

Certificates  of  Indebtedness 26,391,000.00 

Hix  per  cent,  bonds  due  1868 8,908,341.80 

Si.\  jK-r  cent,  bonds  due  1867 9,415,250.00 

Compound  notes 159.012,140.00 

Seven  tliirty  notes 806,251,550.00 

United  States  notes  400.891,368.00 

Fractional  currency 27.070,876.96 

Gold  certificates 10.713.180.00 

T(^\as  indemnity 559,000.00 

lionds  due  and  not  in 3,815,675.80 

Total $2,783,425,878.21 

Ca-sli  in  Treasury $    132,887,549.11 

Amount  and  kind  of  currency  June  30,  1866,  was  as  fol- 
lows : 

One  year  notes  of  1867 $       8,908.341.00 

Two  year  notes  of  1868 9,415,250.00 

Conii)OUud  interest  notes 159,012,140.00 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  139 

■Seven-thirty  notes *    806,251 ,5')0. 00 

Temporary  loan,  ten  days 120,176, 196.00 

Certii3cates  of  indebtedness 26,391,000.00 

United  States  notes  (greenbacks) 400,891.368.00 

Fractional  currency 27,070,876.00 

Gold  certificates 10.713. 180.00 

National  bank  notes 294.579.315.00 

Total $1,863,409,216.00 

Amount  and  kind  of  currency  June  30,  1886,  was  as  fol- 
lows : 

United  States  notes  (greenbacks) $    346.631,016.00 

National  Bank  notesr 277.847,168.00 

■Gold  and  silver 820,998,837.00 

Total 11,445,527,021.00 

Less  reserves  in  banks  and  treasury $  727.122,021.00 

Le.ss  reserves  in  State  Banks 125.000,000.00 

Less  National  Bank  currency  destroyed 15,000,000.00 

Less  greenbacks  destroyed 30,000,000.00 

Less  gold  and  silver  coins 15,000,000.00 

Total f    912,122.021.00 

Leavinc:  in  circulation |    533,405.000.00 

CIRCULATION    PER    CAPITA. 
Year.  Cirmlation.  Povnlation .  Per  Capita. 

1866  1,863,409,216  35.819,281  $52  01 

1867  1,350,949.218  36.269.502  37.51 

1868  794,756,113  37.016,949  21.47 

1869  730,705,638  87,779,800  19.34 

1870  691.028.377  38.558,371  18.70 

1871  670,344.147  39,750,073  16:89 

1872  661,641,363  40,978.607  16.14 

1873  652,896,762  42,245,110  15.45 

1874  632.032.773  43.550,756  14.51 

1875  630.427,609  44.896,705  14.04 

1876  620,316,970  46,284,344  13,40 

1877  586.328.074  47,714,829  12.28 

1878  549,540,187  48,935,306  11.23 

1879  534,424.248  50,155,783  10.65 

1880  528.524,267  51,660.456  10123 

1881  610,632,433  53,210.269  11.48 

1882  657,404.084  54,806,577  11.97 

1883  648,205,895  56,450,714  11.48 

1884  591.476,978  58.144,235  10.17 
1885 533.405.001 59.888,562 %M 

These  amounts  are  taken  from  reports  to  Congress,  and 
the  returns  are  from  those  of  the  director  of  the  mint  and  the 
Comptroller  of  the  currency.  They  must,  therefore,  he  con- 
sidered as  authentic.  A  careful  study  of  the  a1)ove  should  con- 


140  PHILOSOPHY    OF    PRICE. 

vince  any  person  of  the  justice  of  the  cause  I  am  pleading — 

more  domestic  currency  for  the  people. 

Some,  even  now  deny  that  the  7-30  bonds  enterd  into  our 

circulating  medium.     Everyone  in  business  at  that  time  knows 

they  did.     And  Treasurer  Spinner  in  his  report  to  Congress 

for  the  years  1869  and  '70  (page  244)  heads  the  estimate  of 

outstanding  currency  with  a  certain  amount  of  7-30   bonds. 

This  authority  ought  to  settle  the  question.     Others  deny  that 

there  has  been  any  contraction   in   our  domestic  currency, 

claiming  there  is  as  much  money  nov/  as  there  ever  was.     To 

such  I  refer  to  the  above  table.     That  it  has  been  the  settled 

purpose  of  the  Government  for  the  past  20  years  to  contract 

the  circulating  medium  to  the  lowest  possible  amount,  I  refer 

to  the  following  extract  taken  from  the  report  of  Hugh  Mc- 

Culloch,    Secretary  of   the   Treasury,   to   Congress   in  1866, 

page  17 : 

"Anxious  as  he  (the  Secretary)  is  to  lighten  the  public  bur- 
dens and  reduce  the  public  debt,  he  does  not  hesitate  to  say  that 
these  notes  (legal  tenders)  should  be  withdrawn  from  circulation 
and  that  the  furnishing  of  what  paper  currency  may  be  required 
be  left  to  corporations.  The  reduction  could  be  increased  from 
four  millions  to  six  millions  per  month  for  the  present  fiscal 
year  and  to  ten  millions  per  month  thereafter." 

At  the  time  of  this  recommendation,  the  only  manner  that 
these  notes  could  be  withdrawn  was  by  purchasing  them  with 
interest-bearing  bonds.  Yet  this  profound  financier  was  will- 
ing to  burden  the  people  ^vith  more  debt  in  order  to  hire  the 
national  banks  to  issue  our  currency.  This  idea  has  governed 
our  financial  systehi  for  the  past  20  years,  and  is  with  us  to- 
day. 

These  tables  show  $8.90  per  capita  in  circulation  among 
the  people  at  the  present  time ;  and  when  we  reflect  that  hard 
times  compel  wage-workers  and  producers  to  hoard  their  earn- 
ings, no  matter  how  small  the  amount,  we  can  readily  see  that 
there  is  not  over  $5  per  capita  in  actual  circulation  ;  as  a  dollar 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  141 

laid  away  in  a  man's  pocket  is  as  surely  out  of  circulation  as  if 
it  were  in  the  bank.  Hoarded  money  is  as  much  out  of  circula- 
tion as  though  it  remained  in  the  mines. 

In  connection  with  the  above  figures  I  give  the  list  of 
failures  for  each  year  named.  From  them  will  be  seen  the 
dreadful  effects  caused  by  a  shrinkage  in  the  circulating  me- 
dium. With  contraction  come  failures  in  business  as  surely  as 
night  follows  day.  These  figures  speak  with  greater  power 
and  eloquence  than  I  can  find  language  to  express. 

From  1866  to  1886,  the  failures  in  the  United  States  num- 
ber 109,682,  with  Kabilities  amounting  to  $2,744,525,880. 
Comment  is  unnecessary : 

In  1867  there  were  2,780  failures ;  liabilities.  $  96,666,000. 


In  1868 

2,608 

63,694,000. 

In  1869 

2,799 

75,054,000. 

In  1870 

3,551 

88,242,000. 

In  1871 

2,915 

85,252,000. 

In  1872 

4,069 

121,036,000. 

In  1873 

5,183 

228,499,000. 

In  1871: 

5,830 

155,239,000. 

In  1875 

7,740 

201,000,000. 

In  1876 

9,092 

191,117,000. 

In  1877 

8,872 

190,669,000. 

In  1878 

10,478 

234,383,132. 

In  1879 

6,658 

98.149,053. 

In  1880 

4,735 

65.752,000. 

In  1881 

5,582 

81,155,932. 

In  1882 

6,738 

102,000,000. 

In  1883 

9,184 

172,874,172. 

In  1881 

10,968 

226,343.427. 

In  1885 

11,211 

267,34(1,264. 

From  $52.01  per  capita  with  520  business  failures  aggre- 
gating $8,579,000  in  1864,  we  have  reduced  the  amount  in  cir- 
culation to  $8.90  per  capita  with  a  result  of  11,211  failures 
amounting  in  the  aggregate  to  $267,340,264  in  1885.  What  a 
record  is  this  for  the  greatest,  freest  and  most  enlightened  nation 
on  earth !  What  a  record  for  a  nation,  possessing  such  bound- 
less resources  of  soil,  mines,  inventive  genius  and  labor,  with 


142  PHILOSOPHY    OF    PRICE. 

every  facility  to  promote  the  happiness  and  prosperity  of  the 
people,  is  here  chronicled  !  What  reasons  can  be  assigned  for 
the  alarming  fact,  that  from  1866  to  1886,  109,682  of  our  hon- 
est, industrious  business  men  were  given  over  by  law  to  a  re- 
morseless financial  destruction  ? 

There  are  no  reasons,  founded  in  justice,  or  based  on  the 
correct  principles  of  political  economy,  for  the  bankruptcies, 
ruin  and  almost  constant  business  depression  of  the  last  twenty 
years  in  this  country ;  for,  of  all  nations,  ours  should  by  right, 
be  the  most  prosperous,  and  its  people  the  most  happy  of  any 
o»  earth. 

The  effect  of  these  different  acts  of  Congress,  alluded  to, 
was  to  lessen  the  amount  of  the  circulating  medium,  and  by 
this  contraction  the  value  of  labor  and  all  its  products  was 
reduced. 

The  proposition  that  the  amount  of  an  obligation  does  not 
consist  in  the  number  of  dollars  it  contains,  but  in  the  ability 
to  pay,  is  sound  in  all  respects,  and  will  hold  good  in  public  as 
well  as  private  transactions. 

Yet,  in  all  this  legislation  the  people,  who  were  the  actual 
debtors,  and  owed  the  money,  and  from  the  products  of  wjiose 
labor  it  all  must  in  the  end  be  paid,  were  ignored,  in  the  law, 
and  their  wants  and  rights  overlooked. 

It  is  a  well  known  trick  of  capital  to  appeal  to  the  honor 
of  the  nation  to  place  the  credit  of  the  nation  above  the  credit 
of  its  people.  What  does  it  matter  to  me  if  our  national  bonds 
are  selling  at  a  premium  when  my  own  debts  on  that  account 
are  unpaid  and  perhaps  increased  ? 

Capital — gold  and  silver — as  an  evidence  of  wealth,  is  al- 
ways the  first  to  hide  when  there  is  any  trouble,  and  the  last  to 
reappear  and  enter  the  field  of  traffic  when  the  trouble  is  over. 

These  acts  of  Congress  were  passed  purely  in  the  interest 
of  parties  who  lield  our  Government  bonds,  and  those  who 
possessed  wealth  in  currency  ;  for  by  these  very  acts  tlio  differ- 


PKICE  AKD  ITS  RELA'nON  TO  BUSINESS.  143 

ence  between  a  paper  and  a  gold  dollar  was  added  to  the  debt. 
By  the  first  act,  no  one  can  dispute  that  484  million  dollars  M'as 
thereby  added  to  the  debt  and  to  the  taxation  of  the  people. 
By  the  two  last,  God  only  knows  to  what  extent  the  amount 
was  increased,  and  how  far-reaching  were  their  effects. 

Such,  in  brief,  is  the  history  of  contraction.  And  in  that 
shameless  history  we  find  the  reason  for  all  the  widespread  de- 
Btniction  and  want,  bankruptcy  and  distress  we  now  see  on 
every  hand.  "What  is  the  situation  of  our  people  to-day  in  re- 
gard to  national  and  other  indebtedness  ?  Let  us  ascertain,  if 
possible, — for  the  great  mass  of  the  people  are  anxious  to  know 
the  cause  of  these  hard  times — why  tl^ey  can't  pay  their  own 
debts ;  wiiy  wheat,  pork,  beans,  beef  and  all  products  are  so 
low  as  not  to  pay  even  a  small  profit ;  why  our  national  debt 
is  virtually  as  large  as  ever.  They  know  that  a  few  years  ago, 
with  much  less  population  than  now,  pork  was  worth  ten  dol- 
lars per  hundred  ;  now  it  is  selling  for  five.  It  takes  as  much 
labor  to  raise  the  corn  and  fatten  the  pork  now  as  then.  Tlie 
grains'  of  gold  and  silver  in  the  dollar  remain  the  same  now  as 
then.  Why  is  it  that  it  takes  twenty  pounds  of  pork  to  buy  a 
dollar  now,  when  it  took  only  ten  pounds  at  that  time  ?  Our 
mortgages  and  notes  are  the  only  things  that  seem  to  escape 
the  general  shrinkage.  Can  these  questions  be  answered  ?  Tliey 
must  be.  In  1866  we  had  |52  per  capita  in  currency.  "We 
then  had  plenty  of  business,  plenty  of  work  ;  tramps  were  un- 
known, and'  labor  riots  were  yet  to  be  seen.  jSTow,  after  twen- 
ty years  of  contraction,  we  have  less  than  $8.90  per  capita  in 
circulation,  with  all  business  demoralized.  Our  land  is  filled 
with  tramps,  and  strikes  are  the  order  of  the  day. 

In  1866  our  national  debt  amounted  to  nearly  three  bil- 
lions of  dollars.  Now  it  is  about  1.500  millions,  or  a  little  less 
than  one-half  the  original  amount.  Kearly  1900  millions  have 
been  paid  in  interest,  but  nevertheless,  the  debt  is  at  present 
really  as  large  as  ever,  judged  by  the  ability  of  payment.     It 


144:  PHILOSOPHY    OF  PRICE. 

will  take  more  pounds  of  the  five  great  staples  of  this  coun- 
try— wheat,  iron,  cotton,  meat  and  wool — to  pay  what  remains 
of  the  debt,  at  present  prices,  than  it  would  to  have  paid  the 
whole  at  the  prices  when  the  debt  was  contracted.  A  compar- 
ison of  prices  will  prove  this  true.  From  it  we  gather  the  fol- 
lowing startling  facts : 

Original  debt,  $3,000,000,000.  Paid  on  debt,  |1,300,000,- 
000.  Paid  in  interest,  $1,900,000,000.  Total  paid,  3,200,000,- 
O0C».  What  remains  will  require  more  of  labor  and  its  products 
to  pay  than  has  been  already  paid,  as  before  stated ;  because 
prices  have  shrunk  at  least  65  per  cent.  Is  not  this  statement 
plainly  true?  If  true,  is  it  not,  in  the  light  of  our  r>resent  civ- 
■  ilization,  disgracefully  true? 

This  process  is  technically  known  as  making  the  dollar 
good,  and  it  is  all  done  in  the  interest  of  the  workingman,  "so 
that  when  he  earns  a  dollar,  he  can  buy  a  dollar's  worth  with 
it."  Here  is  a  table  showing  the  debt  of  the  United  States  on 
the  first  day  of  July,  1866  and  1884,  including  non-interest 
bearing  greenbacks,  expressed  in  dollars,  and  also  in  the  things 
working  folks  have  to  produce  in  order  to  get  the  dollars  with 
which  to  pay  debts  and  interest : 

Debt  in  1866.  1885. 

Dollars      2,773,000,000  1,830,000,000 

Beef    barrels 129.000,000  185,000.000 

<"orn'  bushels 2,000,000,000  3,000,000,000 

Wlicat    "        800,000,000  1,740,000.000 

Oats        "          r.  262,000,000  4,357,000,000 

Pork,  barrels 82,000,000  •      96,000.000 

('oal   tons 213.000,000  400,000,000 

Cotton,  bales  12,000,000  34,000,000 

Bar  iron,  tons 24,000,000  40,000,000 

Almost  every  product  of  labor  shows  the  same  result.  We 

paid,  from  1866  to  1884,  on  the  public  debt:   interest,  $1,8Y0,- 

000,000,  and  principal  about  12  hundred  millions,  yet  we  find 

that  what  there  is  left  of  it,  when  measured  by  lal)or  or  the 

products  of  labor,  is  50  per  cent  greater  than  the  original  debt. 

This  is  equally  true  with  regard  to  State,  city,  corporation  and 


PKICE  AND  ITS  RELATION  TO  BUSINESS.  145 

private  debts,  which  reach  a  sum  estimated  at  twenty  bilhons 
of  dollars. 

Every  lionest  man  onght  to  know  and  feel  that  a  national 
contract  of  this  character,  running  as  it  does  for  a  long  term  of 
years,  should  not  be  changed.     The  bonds  in  1866  were  paya- 
ble in  lawful  money,  of  which  there  was  about  1500  millions 
used  as   domestic    currency.     The    act   of    March  18,   1869, 
changed  the  contract  between  tlie  people  and  the  bondholders, 
and  made  the  bonds  payable  in  coin.     At  that  time  there  was 
not  a  dollar  of  gold  or  silver  in  circulation.     Both  were  at  a 
premium  of  nearly  30  per  cent.     The  acts  of  1873-5  which  de- 
monetized silver  changed  the  contract  again,  and  made  the 
bonds  payable  in  gold  instead  of  gold  or  silver,  and  at  this  time 
neither  gold  nor  silver  was  in  circulation  except  at  a  premium  of 
about  13  per  cent.     During  the  period  from  1865  to  1873  pa- 
per money  had  appreciated  from  46  to  88  cents  on  the  dollar 
in  gold.     The  act  of  1875  fixed  the  date  of  January  1,  1879, 
as  the  time  for  resumption  of  specie  payments.     These  four 
acts  of  Congress  have  no  parallel  in  the  history  of  the  world. 
Other  nations  have  been  plundered  by  their  rulers ;  but  never 
has  a  people  been  so  wantonly  robbed,  so  infamously  cheated 
of  their  hard  earnings  under  the  disguise  of  statesmanship  be- 
fore.    Nor  have  they  allowed  such  brigandage  of  their  rights 
to  go  unpunished.     But  here,  in  this  country — a  Republic — 
some  of   the  very  men  who  participated  in  this  unrighteous 
proceeding  have  been  kept  continually  in  office  by  the  people 
who  have  meekly,  borne  the  sufferings  caused  by  their  misgov- 
ernment.    As  Madame  Roland  said :  "  O !  Liberty ;  what  crimes 
have  been  committed  in  thy  name ! " 

During  all  this  time  there  has  been  a  constant  contraction 
of  our  currency.  Its  volume  has  grown  less  with  each  suc- 
ceeding year,  and  the  price  of  labor  and  its  products  has  in 
the  same  ratio  declined,  until  there  is  scarcely  a  living  profit  in 
any  legitimate  business.     The  people  are  as  anxious  to  gather 


140  PHILOSOPHY    OF     PRICE. 

riches  as  ever,  but  the  laws  of  the  Govemment  regulating  the 
distribution  of  wealth  are  framed  by  the  hand  of  moneyed 
men.  This  gives  them  power  over  labor,  and  thej  have  used 
that  power  in  a  merciless  manner.  Hence  the  conflict  between 
capital  and  labor.  IS'o  matter  how  much  may  be  said  about 
there  being  no  antagonism  or  conflict  between  capital  and  la- 
bor; that  their  interests  are  identical,  etc.  I  saj  there  is  a 
war,  there  always  has  been  a  war,  and  always  will  be  a  war, 
bitter  and  ugly  between  them.  Their  interests  are  not  identical, 
but  are  diametrically  opposed  to  each  other.  Money  wants  cheap 
labor  and  a  dear  dollar ;  the  toiler  wants  dear  labor  and  a  cheap 
money.  How,  then,  can  there  be  anything  at  best  but  an  armed 
neutrality  between  them  ?  Each  stands  ready  to  take  advantage 
of  the  other.  Law  seems  to  be  the  only  regulator  or  arbiter  of 
their  differences.  If  labor  can  force  a  law  that  will  reduce  the 
abnormal  and  unjust  profits  of  capital  it  will  hasten  to  do  so. 
If  capital  can  enslave  labor  it  does  not  hesitate  or  fail  to  make 
the  point.  For  more  tJian  a  century  the  laws  of  this  nation 
have  favored  the  rich.  But  since  1S61  the  whole  machinery 
of  government  has  been  actually  in  their  possession.  Our 
Senators  and  Representatives  in  Congress,  with  very  few  ex- 
ceptions, become  wealthy,  perhaps  millionaires,  in  a  few  years 
of  service.  All  seem  to  fatten  upon  something — ^2)lant  grow- 
ing out  of  their  official  positions — intangi])le  to  the  masses,  but 
not  ditficult  to  name.  The  scrutiny  of  the  people  will  soon 
disclose  it. 

Every  law  that  has  passed  Congress  since  1861,  regulating 
the  financial  condition  of  the  Government  and  people,  has 
]>een  in  favor  of  the  rich  and  against  the  poor.  Because  of 
this,  great  monopolies  have  grown  up.  Immense  corporations 
have  sprung  into  existence  and  flourish.  All  business  is  done 
upon  a  scale  that  makes  it  impossible  for  the  small  dealer  or 
tradesman  to  endure  the  competition  and  continue  his  business. 
Not  only  this,  but  farming  is  fast  approaching  the  same  condi- 


PRICE    AND    ITS    RELATION   TO    BUSINESS.  147 

tion.  Soon,  unless  these  conditions  change,  our  small  fanns 
will  be  a  thing  of  the  past,  and  a  system  of  tenant  farming  will 
take  its  place. 

In  view  of  the  fact  that  the  contract  between  the  people 
and  their  creditors  has  been  changed  three  times,  and  each 
time  against  the  interests  of  the  tax-payers ;  that,  owing  to  the 
righteous  indignation  of  the  sufferer,  an  act  was  passed  giving 
back  the  silver  dollar  to  the  peojsle,  in  part,  with  full  legal 
tender  qualities,  would  it  not  be  fair  and  just  to  further  Ijenefit 
tliem  bj  passing  one  more  law  restoring  the  original  contract 
in  letter  and  spirit  to  the  nation  ? 

Burke  said  (recognizing  that  there  is  a  faith  due  to  the 

people  as  well  as  to  the  holders  of  public  securities) : 

"It  is  to  the  property  of  the  citizen,  and  not  to  the  de- 
mands of  the  creditor  of  the  state,  that  the  original  faith  of  so- 
ciety is  pledged.  The  claim  of  the  citizen  is  prior  in  time, 
paramount  in  title,  superior  in  equity." 

This  astute  Eno-lish  Statesman  condenses  the  truth  of  the 
whole  question  in  the  paragraph  quoted.  These  measures  were 
denounced  by  the  best  and  truest  men  of  our  country,  and  their 
jDrophecies  as  to  the  consequences  resulting  from  the  enactment 
of  the  laws  referred  to  have  proved  true. 

That  a  want  of  sufficient  currency  is  the  cause  of  distress 
and  bankruptcy  among  nations  cannot  be  denied ;  and  that  a 
sufficient  supply  comj)letely  reverses  this  condition  of  affairs 
must  be  admitted,  I  will  point  to  our  own  condition  of  finan- 
cial prosperity  or  adversity  as  the  case  may  be,  and  quote 
from  the  history  of  other  nations  and  from  other  dates  to  prove 
these  statements  true. 

On  i^age  439  in  the  appendix,  Bancroft  cites  the  follow- 
ing intelligence  from  ISTew  York,  under  date  of  June  4,  1785: 

"There  is  no  trade  with  any  but  the  British,  who  alone 
give  the  credit  they  want,  and  draw  off  all  the  bullion  they  can 
collect.  They  see  no  prospect  of  clothing  themselves,  unless 
they  had  the  circuitous  commerce  they  formerly  enjoyed  with 
Great  Britain,  which  many  think  a  vain  expectation,  now  they 


148  PHILOSOPHY  OF   PRICE. 

are  no  part  of  the  empire.  Tlie  scarcity  of  money  makes  the 
produce  of  a  country  cheap,  to  tlie  disappointment  of  farm- 
ers and  the  discouragement  of  husbandry.  Thus  the  two 
classes  of  merchants  and  farmers,  that  divide  nearly  all 
America,  are  discontented  and  distressed.  Some  great  change 
is  approaching." 

Beginning  on  page  355,  Belknap  particularizes  some  of 

the  extreme  measures  which  popular  clamor  and  the  severity 

of  the  emergency  compelled  several  of  the  Legislatures  to  adopt, 

in  an  attempt  to  alleviate  the  intolerable  situation  of  the  coir 

nmnity.     He  says : 

"Similar  difficulties  at  the  same  time  existed  in  the 
neighboring  State  of  Massachusetts,  to  remedy  which,  among 
other  palliatives,  a  law  was  passed  called  a  tender  act^  by  wliich 
it  was  provided  that  ^executions  issued  for  private  demands 
■might  he  satisfied  hy  cattle  and  other  enumerated  articles,  at 
an  appraisement  of  imjKvrtial  men  under  oath?  For  such  a 
law  the  discontented  party  in  New  Hampshire  petitioned  ;  and 
to  gratify  them,  the  Legislature  enacted,  'that  when  any  debtor 
shall  tender  to  his  creditor,  in  satisfaction  of  an  execution  for 
debt,  either  real  or  personal  estate  sufficient,  the  body  of-  the 
debtor  shall  be  exempt  from  imprisonment ;  and  the  debt  shall 
carry  an  intei-est  of  six  per  cent.,  the  creditor  being  at  liberty 
either  to  receive  the  estate,  so  tendered,  at  a  value  estimated 
by  three  appraisers,  or  to  keep  alive  the  demand  by  taking  out 
an  alias,  within  one  year  after  the  return  of  any  former  exe- 
cution, and  levying  on  any  estate  of  the  debtor  which  he  can 
■find'.  At  the  same  time  an  act  was  made  enlarging  the  power 
of  the  Justices  of  the  Peace  to  try  and  determine  actions  of 
debt  and  trespass  to  the  value  of  ten  pounds.  These  laws  were 
complained  of  as  unconstitutional ;  the  former  as  being  retro- 
spective, and  changing  the  nature  of  contracts  ;  the  latter  as 
depriving  the  creditor,  in  certain  cases,  of  a  right  to  trial  by 
jury.  But  so  strong  was  the  clamor  for  redress  of  grievances, 
and  60  influential  was  the  example  of  the  neighboring  State, 
that  some  of  the  best  men  in  the  Legislature  found  it  necessary 
to  comply,  whilst  another  part  were  secretly  in  favor  of  worse 
measures." 

Belknap,  on  page  357,  further  said : 

"The  scarcity  of  money  was  still  a  grievance  which  the 
laws  had  not  remedied,  but  rather  had  a  tendency  to  increase 


PKICE  AND  ITS  RELATION  TO  BUSINESS.  149 

To  encourage  its  importation  into  the  country,  the  Legislature 
exempted  from  all  port  duties,  except  light-money,  every  vessel 
which  should  bring  gold  and  silver  only  ;  and  from  one-half  of 
the  duties,  if  a  sum  of  money  equal  to  one-half  of  the  cargo  should 
be  imported.  But  it  was  to  no  purpose  to  import  money,  un- 
less encouragement  were  given  for  its  circulation,  which  could 
not  be  expected  v.'hilst  the  'tender  act'  was  in  force  ;  for  every 
man  who  had  money  thought  it  more  secure  in  his  own  hands 
than  in  the  hands  of  others." 

Under  date  of  September  20, 1786,  Otto,  the  French  Min- 
ister in  Xew  York,  wrote  home  to  his  Government,  as  follows : 

"In  the  small  state  of  Connecticut  alone  more  than  five 
hundred  farm.s  have  been  offered  for  sale  to  pay  the  arrears  of 
taxes.  As  these  sales  take  place  only  for  cash,  they  are  made 
at  very  low  price,  and  the  proprietors  often  receive  not 
more  than  one-tenth  of  the  value.  The  people  feel  the  deadly 
consequence  of  this  oppression,  but  not  being  al)le  to  discover 
its  true  cause,  it  turns  upon  the  judges  and  the  lawyers.  In 
the  States  which  have  paper  money,  the  rigor  of  the  laws  is  less 
desolating  for  the  former,  since  he  can  always  get  paper  enough 
to  satisfy  his  engagements ;  and,  besides,  the  creditors  are  less 
urgent." 

Beginning   on   page   35    of  ^  The  ]S"ew  Olive  Branch," 

Mathew  Carey  says : 

"I  have  in  1786  seen  sixteen  houses  to  let  in  two  squares  of 
about  eight  hundred  feet  in  one  of  the  best  sites  for  business  in 
Philadelphia.  Real  property  could  hardly  find  a  market.  The 
number  of  persons  reduced  to  distress,  and  forced  to  sell  their 
merchandise,  was  so  great,  and  those  who  had  money  to  invest 
were  so  very  few,  that  tlie  sacrifices  were  immense.  Debtors  were 
ruined  without  paying  a  fourth  of  the  demands  of  their  credi- 
tors. There  were  most  unprecedented  transfers  of  property. 
Men  worth  large  estates,  who  had  unfortunately  entered  into 
business,  were  in  a  year  or  two  totally  ruined ;  and  those  who 
liad  a  command  of  ready  money  quadrupled  or  quintupled  their 
estates  in  an  equally  shoi^  space.  Confidence  was  so  wholly 
destroyed  that  interest  rose  to  two,  two  and  a  half,  and  three 
per  cent,  per  month.  And  bonds  and  judgments  and  mort- 
gages were  sold  at  a  discount  of  twenty,  thirty,  forty,  and  iifty 
per  cent.  In  a  word,  few  countries  have  experienced  a  more 
awful  state  of  distress  and  wretchedness." 

Chief-Justice    Marshall,  taking  a  general    survey  of  the 


IbU  PHILOSOPHY    OF    PKICE. 

eitiiation  tlirorighoiit  the  Confederation,  says,  in  the  fifth  vol- 
ume of  his  "  Life  of  Washington,"  beginning  on  page  88 : 

"In  many  of  those  states  which  had  repelled  every  attempt 
to  introduce  into  circulation  a  depreciated  medium  of  com- 
merce, or  to  defeat  the  annual  provision  of  funds  for  the  pay- 
ment of  the  interest,  the  debt  sunk  in  value  to  such  a  degree 
that  those  creditors  who  w^ere  induced  by  their  necessities, 
or  want  of  coniidence  in  their  rulers,  to  transfer  their  public 
securities,  were  compelled  to  submit  to  a  loss  of  from  ten  to 
sixteen  or  seventeen  shillings  in  the  pound.  However  unex- 
ceptionable might  be  the  conduct  of  the  existing  Legislature, 
the  hazard  ironi  those  which  were  to  follow  was  too  great  to 
be  encountered  without  an  immense  premium.  In  private 
transactions,  an  astonishing  degree  of  distrust  also  prevailed. 
The  bonds  of  men  nj^hose  competeriey  to  ^Kty  tit  eh'  debts  was  un- 
questionable, could  not  be  negotiated  but  at  a  discount  of 
thirty,  forty,  and  fifty  per  centum:  real  property  was  scarcely 
vendible f  and  sales  of  any  article  for  ready  money  could  be 
'made  only  at  a  ruinous  loss.  The pjrospect  of  extricating  the 
country  from  these  embarrassments  was  by  no  means  flatter- 
ing. "Whilst  everything  else  fluctuated,  some  of  the  causes 
wliich  produced  this  calamitous  state  of  things  were  permanent. 
The  hope  and  fear  still  remained  that  the  delator  party  would 
obtain  the  victory  at  the  elections ;  and,  instead  of  making  the 
painful  effort  to  obtain  relief  by  industry  and  economy,  many 
rested  all  their  hopes  on  legislative  interference.  The  mass  of 
national  labor,  and  of  national  loealth,  was  consequently  di- 
minished. In  every  quarter  were  found  those  who  asserted 
it  to  be  impossible  for  the  people  to  pay  their  public  or  private 
debts;  and,  in  some  instances,  threats  were  uttered  of  suspend- 
ing the  administration  of  justice  by  private  violence.  About 
three  hundred  mutineers  met  near  Exeter  to  break  up  the 
courts  of  justice ;  l)ut  Governor  Sullivan,  a  distinguished 
officer  during  the  war,  instantly  put  himself  at  the  head  of  the 
militia,  dispersed  the  insurgents,  and  dispersed  the  chiefs  of 
the  revolt.  The  people  of  (yoimecticut  have  equally  made 
some  (iiforts  for  the  abolishment  of  debts  and  breaking  up  of  the 
courts  of  justice,  but  the  vigilance  of  the  Governor  lias  thus 
far  prevented  any  overt  act.  It  must  be  agreed  that  these  in- 
surrections are  in  great  jM^'t  due  to  the  scarcity  of  specie.''^ 

Minot,  in  his  "History  of  the  Insurrection  in  Massachu- 
setts," page  27,  summing  up  the  causes  of  public  disorder,  pro- 
ceeds as  foj].!WR : 


PRICK  AND  ITS  RELATION  TO  BUSINESS.  151 

■  "From  the  short  viev,-  we  have  taken  of  the  affairs  of  the 
Commonwealth  sufficient  causes  appear,  to  account  for  the 
commotions  which  ensued.  A  heavy  debt  lying  on  the  State, 
added  to  burdens  of  the  same  nature  upon  almost  every  incor- 
poration within  it ;  a  decline,  or  rather  an  extinction,  of  pu])lic 
credit ;  a  relaxation  of  manners  and  a  free  use  of  foreign  lux- 
uries ;  a  decay  of  trade  and  manufactures,  with  a  prevailing 
scarcity  of  money ;  and,  above  all,  individuals  involved  in 
debt  to  each  other,  are  evils  which  leave  us  no  necessity  of 
searching  further  for  the  reasons  of  the  insurrection  which 
took  place," 

Henry  Clay  said : 

"The  revulsions  of  1837  produced  a  far  greater  havoc  than 
was  experienced  in  the  period  above  mentioned.  The  ruin 
came  quick  and  fearful.  There  were  few  that  could  save 
themselves.  Property  of  every  description  was  parted  with  at 
sacrifices  that  were  astounding,  and  as  for  the  currency,  there 
was  scaraely  any  at  all.  In  some  parts  of  the  interior  of  Penn- 
sylvania, the  people  were  obliged  to  divide  bank  notes  into 
halves,  quarters,  eighths,  and  so  on,  and  agree  from  necessity 
to  use  them  as  money.  In  Ohio,  with  all  her  al)undance,  it 
was  hard  to  get  money  to  pay  taxes.  The  Sheritf  of  JMuskin- 
gum  County,  as  stated  in  the  Guernsey  Times,  in  the  summer 
of  1842,  sold  at  auction  one  four-horse  w^agon  at  $5.50 ;  ten 
hogs  at  6  1-4  cents  each ;  two  horses  (said  to  l)e  worth  from 
$50.  to  $75.  each)  at  $2.  each  ;  two  cows  at  $1.  each  ;  a  barrel 
of  sugar  for  $1.50,  and  a  'store  of  goods'  at  that  rate.  In  Pike 
County,  Missouri,  as  stated  by  the  Hannibal  Journal,  the 
Sheriff  sold  three  horses  at  $1.50  each;  one  large  ox  at  12  1-2 
cents ;  five  cows,  two  steers,  and  one  calf,  the  lot  at  $3.25 ; 
twenty  sheep  at  13  1-2  cents  each ;  tM'enty-four  hogs  at  25 
cents  for  the  lot  ;  one  eight-day  clock  at  $2.50  ;'lot  of  tobacco, 
seven  or  eight  hogsheads,  at  $5  ;  three  stacks  of  liay  at  25  cents 
each." 

Also: 

"By  the  contraction  of  money  in  England,  from  1816  to 
1825,  more  thixn  four-Jiyt/i-s  of  the  land  owners  were  robbed  of 
their  estates,  the  whole  numlier  in  the  Kingdom  shrinking 
from  160  thousand  to  30  thousand." 

"When  Louis  Phillippe,  in  1848,  escaped  froni  his  outraged 

people,  the  financial  condition  of  the  nation  was  about  as  bad 

as  it  could  be  compatiblv  v\'itli  existence. 


152  PHILOSOPHY     OF    PKICE.       • 

The  British  Embassador  wrote  in  March  that  year,  as 
follows : 

"The  scarcity  of  money  became  so  great  that  a  sovereign 
passed  for  four  and  forty  francs.  Many  persons  sent  their 
plate  to  be  coined  into  five  franc  pieces.  It  was  melancholy  to  see 
ihe  most  civilized  capital  in  the  world  suddenly  reduced  to  the 
primitive  conditions  of  barter." 

In  December,  1848,  the  London  Times,  with  its  ordinary 
Delphic  dogmatism,  announced  the  inevitable  failure  of  the 
French  Republic  and  disintegration  of  French  society  in  the 
near  future,  but  so  wise  was  the  administration  of  the  states- 
men of  that  nation  that  two  months  later  the  calumniator  was 
forced  to  eat  his  own  words,  saying  in  his  columns  (The 
Times),  February  16,  1849  : 

"As  a  mere  commercial  speculation  with  the  assets  which 
the  bank  held  in  hand  it  might  then  have  stopped  payment 
and  liquidated  its  affairs  with  every  probability  that  a  very  few 
weeks  would  enable  it  to  clear  off  all  its  liabilities.  But  this 
idea  was  not  for  a  moment  entertained  by  M.  D' Argout,  and  he 
resolved  to  make  every  efiort  to  keep  alive  what  may  be  termed 
the  circulation  of  the  life-blood  of  the  community.  The  task 
was  overwhelming.  IVk^^ney  was  to  be  found  to  meet  not  only 
the  demands  on  the  bank,  but  the  necessities,  l)oth  public  and 
private,  of  every  rank  in  society.  It  was  essential  to  enable 
the  manufacturers  to  work,  lest  their  workmen,  driven  to  des- 
peration, should  fling  themselves  amongst  the  most  violent 
enemies  of  public  order.  It  was  essential  to  provide  money 
for  the  food  of  Paris,  for  the  pa}^  of  the  troops,  and  for  the 
daily  support  of  the  ateliers  nationaux.  A  failure  on  any  one 
point  would  have  led  to  a  fresh  convulsion.  But  the  panic 
had  been  folloM^ed  by  so  great  a  scarcity  of  the  metallic  cur- 
rency, that  a  few  days  later,  out  of  a  payment  of  26  millions 
fallen  due,  only  47  thousand  francs  could  be  recorded  in 
silver. 

In  this  extremity,  when  the  bank  alone  retained  any  avail- 
able sums  of  money,  the  Government  came  to  the  rescue,  and 
on  the  night  of  the  15tli  of  March,  the  iiotes  of  the  hank  were 
by  a  decree,  made  a  legal  tender,  the  issue  of  these  notes  being 
limited  in  all  Xo  350  millions,  but  the  amount  of  the  lowest  of 
them  reduced  for  the  public  convenience  to  100  francs.  One 
of  the  great  difficulties  mentioned  m  the  report  was  to  print 


PKICE  AND  ITS  EPILATION  TO  BUSINESS.  153 

these  100  franc  notes  fast  enough  for  the  public  consumption. 
In  ten  days  the  amount  issued  in  this  form  had  reached  80 
milHons. 

To  enable  the  manufacturing  interests  to  weather  the 
storm,  at  a  moment  when  all  the  sales  were  interrupted,  a  de- 
cree of  the  National  Assembly  had  directed  warehouses  to-be 
opened  for  the  reception  of  all  kinds  of  goods,  and  provided 
that  the  registered  invoice  of  these  goods,  so  deposited,  should 
be  made  negotiable  by  endorsement.  The  bank  of  France  dis- 
counted these  receipts.  In  Havre  alone  eighteen  millions  were 
thus  advanced  on  Colonial  prochice,  and,  in  Paris,  fourteen 
millions  on  mci'chandise  ^  in  all,  sixty  millions  were  thus  made 
available  for  the  purposes  of  trade.  Thus,  the  great  institution 
had  placed  itself,  as  it  were,  in  direct  contact  with  every  inter- 
est of  the  community,  from  the  Minister  of  the  Treasury  down 
to  the  trader  in  a  distant  out-port.  Like  a  huge  hydraulic  ma- 
chine, it  employed  its  colossal  powers  to  pump  a  fresh  stream 
into  the  exhausted  arteries  of  trade,  to  sustain  credit,  andwr^- 
sef'oe  the  circulation  from  com]?lete  collapse.'''' — The  Banlt 
Charter  Act.,  and  the  liate  of  Interest.,  London,  1873,  pp.  123-5, 

Sir  Archibald  Allison  saw  as  clearly  as  the  noon  day  sun 

the  possibilities  of  such  a  calamity  when  he  wrote,  in  1852 : 

"  Gold  is  a  very  good  thing,  and  necessary  for  foreign  ex- 
changes, but  it  is  not  worth  purchasing  by  the  ruin  of  the 
country. 

In  every  one  of  the  great  monetary  crises  which  have  oc- 
curred every  live  or  six  years  during  the  last  thirty,  from 
$500,000,000  to  |750,000,6(:»0  have  been  destroyed.  Is  the  re- 
tention of  gold  worth  purchasing  at  such  a  price  % 

It  may  be  safely  affirmed  that  if  the  requisite  change  is 
not  made,  the  nation  will  continue  to  be  visited  every  four  or 
five  years  by  periods  of  panics  which  will  destroy  all  the  fruits 
of  former  prosperity,  and  the  people,  like  the  unfortunate  cul- 
prits who  under  the  former  inhuman  system  of  military  law — 
when  sentenced  to  1,000  or  1,500  lashes— were  brought  out  at 
successive  times  to  receive  their  punishment  ])y  installments  a.s 
soon  as  their  wounds  had  been  healed  in  the  hospital." 

The  speech  of  General  Gordon  in  the  United  States  Sen- 
ate, devoted  largely  to  the  point  that  the  disasters  which  had 
overtaken  the  business  of  the  country  were  the  direct  results 
of  the  contraction  of  the  currency,  was  promptly  met  with  rid- 
icule and  indifference.     His  argument  was  irresistible,  notwith. 


154  PHILOSOPHY     OF     PRICE. 

standing:  "In  the  discussion  of  this  question  no  tongue  is  so 
eloquent  as  facts.  As  overtopping  the  eloquence  of  any  man 
upon  this  subject — which  reaches  into  all  our  homes — we  of- 
fer the  record  of  these  melancholy  years  that  cover  the  story 
of  contraction. 

In  tracing  the  story  of  bankruptcy  and  hard  times  during 
the  decade  from  1866  to  1877,  the  table  we  submit  will  be 
profitable  for  instruction  and  reproof.  The  facts  it  sets  forth, 
the  business  failures  and  business  depression,  bear  the  relation 
of  cause  and  effect.  Disaster  grew  \vith  contraction,  step  by 
step.  The  woes  that  have  fallen  upon  business  have  trod  upon 
the  heels  of  contraction  of  the  machinery  created  for  the  con- 
duct of  business  with  painful  and  unmistakable  precision.  The 
enormous  remorseless  contraction  has  done  its  work.  The 
number  of  annual  failures  has  increased  from  less  than  500  to 
about  14,000,  and  the  liabilities  involved  in  these  failures  have 
grown  from  nine  millions  a  year  to  more  than  300  millions. 
The  table  shows  why : 

STATEME-NT  OF  TEE  PUBLIC  I>EBT  OF  THE  UNITED  STATES. 

Bonded  debt,  including  Loans  of  various  dates.  Five-twen- 
ties, Ten-forties,  etc.: 

June  30,  1866 |1, 090,198,126 

June  30,  18G7 1,439,838,676 

June  30,  1868 1,959,995,357 

June  30,  1869 2,031,684,235 

June  30,  1870 2,015,637,640 

June  30,  1871 1 ,967,076,167 

June  30,  1872 1,870,497,982 

June  30,  1873 1,825,235,077 

June  30,  1874 1,745,996,115 

.June  30,  1875 1,783,245,331 

June  30,  1876 1,764,469,481 

June  30,  1877 1,714,479,682 

Circulating  medium,  including  Treasury  notes,  gold  cer- 
tificates, fractional  currency,  demand  notes,  United  States 
notes,  etc.: 

June  30,  1806 $1,693,379,753 

June  30,  lbC7 1,091,360,338 


PEICE  AND    ITS    RELATION  TO    BUSINESS.  ^^55 

June  30,  18f.8 676,126,507 

June  BO,  18o9 614,879,520 

June  30,  IbTO 479,420,378 

June  30,  1871 450,721,775 

June  30,  1872 433,386,848 

June  30,  1873 473,870.528 

June  30,  1874 510,511.248 

June  30,  1875 498,984.71 1 

June  30,  1S76 466,549,097 

June  30,  1877 477,445,221 

Annual  contraction: 

June  30,  1867 $603,019,415 

June  30,  1868 415,233,831 

June  30,  1889 61,346.987 

June  30,  1870 135,459,147 

June  30,  1871 28,698,603 

June  30,  1872 17,334,927 

June  30,  1875 11,526,537 

June  30,  1876 32,435,614 

During  three  years  of  tins  time  there  were  temporary  or 
accidental  pauses  in  this  policy  of  contraction,  closing  with  the 

years  as  follows: 

June  30,  1873 /..... $40,583,68a 

June  30,  1874 36,640,720 

June  30,  1877 10,896,124 

The  panic  of  IS 73  compelled  the  chief  variation  from  the 
otherwise  uniform  and  pitiless  policy. 

This  is  the  record  of  contraction.  What  is  the  correspond- 
ing record  of  prosperity?  The  argument  of  facts  must  now 
be  heard.  That  country  is  prosperous  in  which  every  frugal 
and  industrious  man  can  pay  his  debts.  Even  the  money-lend- 
er must  admit  this.  But  without  discussion,  let  us  place  side 
by  side  the  record  of  "  prosperity  "  and  the  record  of  contrac- 
tion. 

The  era  of  abundant  money  began  in  1862.  The  era  of 
contraction  began  in  1865-0.  This  is  the  accompanying  busi- 
ness history.  In  1863  there  were  but  485  failures  in  the  Unit- 
ed States,  with  Habilities  of  but  $6,864,700.  In  1864  there 
were  but  520  failures,  with  habilities  of  but  $8,579,000.  In 
1865  there  were  but  530  failures  in  the  country,  and  the  liabil- 
ities involved  were  but  $17,625,000.  At  this  time,  or  a  little 
before,  contraction  commenced  the  destruction  of  tlie  business 


156  PHILOSOPHY    OF    PRICE. 

of  the  country,  as  shown  above.     The  result  has  more  than 

once  been  exhibited  in  detail.     The  annual  number  of  failures 

has  grown  from  500  to  14,000,  and  the  liabilities  from  $9,000,- 

000  to  $330,000,000."  This  is  the  argument. 

In  1879  Thomas  Ewing  said : 

"Resumption  does  not  mean  the  equalization  of  paper 
money  with  gold ;  it  means  an  addition  of  from  50  to  66  per 
cent  to  the  burden  of  all  debts  and  taxes  to  be  paid  by  the 
people.  Will  the  people  permit  adding  to  the  burden  of  their 
taxes,  their  national,  state,  municipal,  railroad  and  individual 
debts,  not  less  than  $5,000,000,000  by  forcing  prices  down  to  a 
gold  level?  Unless  the  demands  of  the  people  are  complied 
with  by  the  passage  of  some  such  bill  as  this,  the  whole  re- 
sumption scheme  will  be  smashed,  even  though  some  political 
parties  may  have  to  be  smashed." 

In  1815  the  war  closed  by  the  capture  of  Napoleon  at 
"Waterloo.  The  scourge  of  war  now  being  removed,  it  seems 
to  have  been  thought  that  the*  country  could  endure  without 
entire  destruction  a  scourge  far  worse  than  the  war ;  and  the 
Shylocks,  with  Sir  Robert  Peel  at  their  head,  or  as  an  associate, 
began  to  insist  strenuously  upon  a  law  for  resumption  of  specie 
payments.  And  then  what  took  place  ?  Let  Thomas  Double- 
day,  in  his  financial,  monetary  and  statistical  History  of  Eng- 
land, tell.     He  says : 

"  Prices  fell  on  a  sudden  to  a  ruinous  extent — banks 
broke — wages  fell  with  prices  of  manufactures ;  and  before  the 
year  1816  had  come  to  a  close,  panic,  bankruptcy,  riot  and  dis- 
affection had  spread  through  the  land.  Yast  bodies  of  starving 
and  discontented  artisans  now  congregated  together  and  de- 
manded reform  of  the  Parliament.  The  discontents,  as  usual, 
t/te  Govei'ynnent  put  doimi  by  an  armed  force.  As  the  mem- 
orable first  of  May,  1823,  drew  near,  the  country  l^ankers,  as 
well  as  the  Bank  of  England,  naturally  prepared  themselves  by 
a  gradual  narrowing  of  their  circulation  fur  the  dreaded  hour 
of  gold  and  silver  payments  on  demand.  *  *  *  The  dis- 
tress, ruin  and  bankruptcy  which  now  took  place  were  univer- 
sal, affecting  l^oth  the  great  interests  of  land  and  traded 

The  great  Scotch  economist  ard  scientist.  Professor  Mc- 

Culloch,  says: 


PRICE  AND  ITS  RELATION  TO  BUSINESS.  157 

"  Thus  it  appears  that,  whatever  may.  he  the  niatertal  of 
the  money  of  a  country,  whether  it  consists  of  gold,  silver, 
copper,  iron,  cowries  or  paper,  and  however  destitute  it  may  be 
of  any  intrinsic  value,  it  is  yet  possible,  by  suthciently  limiting 
its  quantity,  to  raise  its  value  in  exchange  to  any  conceivable 
extent." 

The  following  tables  of  facts  and  results,  compiled  from 
official  statistics,  tell  a  tale  worth  a  dozen  theories  that  panics 
and  periods  of  good  and  bad  times  naturally  follow  each  other 
like  the  troughs  and  waves  of  the  ocean.  We  give  below  the 
volume  of  money  and  results  at  certain  dates : 

1811—$     28,000,000 Hard   times 

181&—      110,000,000 Good  times. 

1818—       40,000,000 Panic. 

1832—       60,000,000 Fair. 

1837—      150,000,000 Booming  times. 

1843—       58,000,000 Panic. 

1847—      105,000,000 Good  times. 

1857—  215,000,000 Boominc  times. 

1858—  150,000,000 Panic. 

1865—  1,651,282,373,  failures    530 Booming  times. 

1873—      738,219,749,      "       5,183 Pamc. 

1877—      696,443,394,      "       8,872 Prostration 

These  figures  demonstrate  that  those  who  control  the 
money  volume  control  the  times,  as  much  as  he  who  controls 
the  helm  controls  the  course  of  the  ship. 

1  might  quote  similar  statements  from  a  hundred  different 
works  on  money,  but  the  ground  is  more  completely  covered 
by  simply  stating  that  no  economist  or  scientist  who  has  writ- 
ten on  money  for  the  past  three-quarters  of  a  century  denies 
this  truth  regarding  money — in  fact,  it  is  incontrovertible. 

I  will  quote  from  an  article  in  the  New  York  Tribune  of 
late  date  in  further  proof  of  the  propositions  heretofore  made 
in  relation  to  the  effect  that  the  volume  of  money  has  on 
price.  The  dates  given  in  the  tables  comprise  the  periods  of 
contraction  from  1865  to  1885.  The  results  are  obtained  from 
the  only  fair  method  of  computation  and  comparison  that  has 
yet  been  devised.  A  careful  study  of  the  figures  given  in 
these  tables  will  be  of  service  to  the  reader,  and  enable  him  to- 
discover  the  causes  operating  to  produce  either  financial  dis- 


158  PHILOSOPHY  OF   PRICE. 

tresa^  or  universal  prosperity  among  the  people.     The  quotation 
is  as  follows : 

"It  must  suffice  here  to  state  that  quotations  of  aliout  200 
articles  are  compared  since  1850,  and  the  amount  of  money  is 
ascertained  whicl'i  would  purchase  at  different  dates  of  these 
various  articles,  quantities  corresponding  as  closely  as  possible 
to  their  ascertained  consumption  in  1880,  the  date  of  the  last 
census.  Among  the  articles  compared  are  wheat,  corn,  oats, 
rye,  barley,  beans  and  peas,  mess  pork,  bacon,  liam,  live  hogs, 
lard,  fresh  beef,  tallow,  live  sheep,  poultry,  butter,  cheese, 
eggs,  milk,  hay,  potatoes,  turnips,  cabbage,  onions,  apj)les, 
raisins,  sugar,  brown  and  crushed ;  molasses,  coffee,  tea,  to- 
bacco, whisky,  malt  and  hops,  mackerel,  codfish,  salt,  rice,  nut- 
megs, cloves,  pepper,  cotton,  print  cloths  and  standard  sheet- 
ings, wool  of  different  qualities,  blankets,  carpets,  flannels, 
leather,  boots,  shoes,  hides,  silk,  India  rubber,  iron  (pig  and 
bar),  nails,  steel  rails,  coal,  oil  (crude  and  reflned),  tin  and  tin 
plates,  copper,  lead,  hemp,  lumber,  spruce  and  pine,  oak,  ash, 
walnut,  and  white  wood,  lath,  ])rick,  lime,  turpentine,  linseed 
oil,  soap,  glass,  paper,  white  lead,  and  twelve  other  kinds  of 
paints,  fertilizers,  and  over  fifty  kinds  of  drugs  and  chemicals. 
Constant  quantities  of  all  the  articles,  proportioned  as  accu- 
rately as  I  am  able  to  the  quantities  actually  entering  into  con- 
sumption in  1880,  could  have  been  bouglit  at  the  quotations 
on  or  nearest  to  the  22d  for  $74.56,  and  the  same  quantities 
would  have  cost  twenty  years  ago,  November  1,  1865,  no  less 
than  $174.77. 

A  part  of  this  change  has  obviously  been  due  to  the  de- 
preciation in  the  value  of  the  legal  tenders,  now  equal  to  gold, 
but  of  which  it  took  November  1,  1865,  about  $1.45  7'-8  to 
purchase  $1  in  gold.  But  we  have  no  right  to  assume  that  the 
prices  of  this  year  measure  the  purchasing  power  of  gold, 
rather  than  the  prices  of  May  16,  1882,  when  $106.59  was  re- 
quired to  purchase  the  same  quantities  of  the  same  articles  that 
cost  in  Arigust  last  $74.56.  Here  has  l)een  a  decline  of  more 
than  $32  in  the  gold  price  of  the  entire  list  of  commodities, 
legal  tenders  liaving  been  equivalent  to  gold  for  several  years 
prior  to  1882.  The  sums  in  currency  wliich,  from  data  thus  far 
o1)tained,  appear  to  l^e  equivalent  in  purchasing  power  at  dif- 
ferent periods,  selected  to  illustrate  the  extremes  of  u]:)ward  or 
downward  movements,  are  given  in  the  first  column  of  the  fol- 
lowing table.  It  is  proper  to  add  that  the  completion  of  the 
inquiry  may  warrant  small  changes  in  these  figures,  but  proba- 


PEICE    AND   ITS   RELATION   TO    BUSINESS. 


159 


bly  not  changes  of  importance.  In  the  second  column  is  given 
the  price  of  gold  in  currency  the  dates  named,  and  in  the  third 
column  the  gold  value  of  the  sums  in  currency  which  appear 
to  have  had  equivalent  purchasing  power  at  the  different  dates 
prior  to  resumption : 

COST  OF  CONSTANT  QUANTITIES  OF  PRODUCTS  AT  DIFFERENT  DATES. 

PRIOR  TO  THE  WAR. 


1860,  May  1. 


Cost  in 
Currency. 
.$100,00 


Af'TER  THE  WAR. 


1865,  Nov.  1 $174.77 

1866.  May  1  157.60 

1866.  Nov.  1 170.31 

1871,  Nov.  1 122.03 


THE  PANIC  RECORD. 


1872,  May  1 $137.13 

1873,  Nov.  1 115.14 

1874,  Mayl 122.77 


Price  of 
Gold. 
$100.00 

$145.87 
125.12 
146.25 
112.00 

$112..50 
108.50 
112.87 


PREPARATION  FOR  RESUMPTION. 


Cost  in 

Gold. 

$100.00 

$119.81 
126.04 
117.82 
108.95 


^21.81 
106.01 
108.77 


1875,  Jan.  1 $113.01  $112.37  $100.37 

1876,  Oct.l.. 97.30  110.00  88.45 

1877,  May  1 99  29  106.75  93.01 

1878,  Mayl 82.09  100.37  81.81 

1878,  Oct.  18 77.94  100.37  77.65 

RESUSTPTION. 

1879,  Nov.  1 $93.48  $....  $. . . . 

1880,  Jan.  1 103.42 

1881,  Jan.  1 95.93     > 

1882,Mayl6 106.59 

THE  RECENT  DECLINE. 

1883,  MarchlS $97.82  $....  $. 

1883,  Nov.  1., 88.71 

1884,  Jan.  1 88.37 

1884,  Nov.  21 78.47 

1885,  .Jan.  1 79.66 

1885,  May  9 80.22 

1885,  Aug.  22 74.56 

1885,  Nov.  1 75.35 

1885,  Close 78.53    . 

It  is  not  only  clear  from  this  comparison  that  the  prices  of 
18S5  have  been  the  lowest  in  our  history  for  twenty-five  years, 
but  that  there  has  been  a  general  tendency  toward  lower  prices. 
From  1866  to  1871,  and  again  from  1872  until  1878,  and  again 
from  1882  until  1885,  prices  fell  quite  steadily.  Indeed,  liad 
not  the  short  crop  of  1881  caused  a  temporary  advance  in  the 


160  PHILOSOPHY    OF   PEICE. 

spring  of  1882,  the  range  of  January,  1880,  would  have  been 
the  highest  of  the  later  period,  and  it  might  have  been  said 
that  the  present  era  of  declining  prices  had  continued  with  lit- 
tle intermission  for  six  years.  None  will  fail  to  observe  how 
swift  and  sharp  the  advances  have  been — about  12  per  cent, 
from  November,  1871,  to  May,  1872,  and  25  1-2  per  cent, 
from  October,  1878,  to  January,  1880.  But  these  spasmodic 
advances,  by  which  the  general  tendency  downward  is  inter- 
rupted, only  serve  to  make  it  more  clear  that  prices  have  been 
tending  irresistibly  toward  a  lower  level  than  that  of  1860,  not 
only  during  the  period  of  paper  depreciation,  but  since  gold 
has  been  the  measure  of  value." 

One  remarkable  feature  in  this  connection  is  that  such  an 
article  should  have  appeared  in  a  journal  making  a  bitter  war 
on  silver.  If  the  above  tables  prove  anything,  they  prove  that 
gold  has  advanced  in  value  23.86  per  cent,  since  1860.  There 
must  have  been  a  general  decline  in  the  price  of  all  the  prod- 
ucts of  labor  as  well  as  in  labor  itself,  or  else  an  advance  in  the 
value  of  gold.  Which  is  most  reasonable  ?  Gold  being  a  com- 
modity like  all  the  other  products  named,  it  is  not  reasonable 
to  presume  that  gold  alone  has  remained  unchanged.  Besides 
this,  a  constant  and  lively  competition  has  been  going  on  for 
the  purchase  of  this  gold  among  the  most  powerful  nations  of 
the  earth.  England,  France,  Germany,  the  Netherlands,  as , 
well  as  America,  have  all  struggled  to  obtain  their  share,  and 
even  more  than  the  conditions  of  their  conmiercial  relations 
would  admit. 

Statistics  show  that  the  supply  of  coined  gold  is  being 
gradually  encroached  upon  by  reason  of  its  increased  uses  in 
the  arts — they  show  there  is  not  gold  enough  in  tlic  world 
among  civilized  nations  to  pay  5  per  cent,  of  their  indebted- 
ness. Then,  why  should  we  ask,  in  the  face  of  tliese  facts, 
whether  all  other  products  had  fallen  in  price,  or  gold  appre- 
ciated ?  Further,  this  comparative  decrease  in  prices  incident  to 
an  increase  in  the  value  of  gold  follows  in  direct  ratio  with 
the  increase  and  decrease  of  the  circulating  medium.      No 


r&ICE  AND  ITS  RP:LATI0N  TO  BUSINESS.  1'61 

stronger  argument  can  be  made,  showing  tlie  truth  of  the  last 
proposition,  than  the  figures  above  quoted.  Since  18G6  prices 
have  fallen.  This  has  been  the  general  rule.  During  all  this 
time  the  volume  of  money  has  been  shrinking,  and,  as  a  nat- 
ural result,  gold  has  appreciated  in  value — it  having,  by  law 
and  executive  coercion,  been  made  the  basis  of  all  paper  circu- 
lation. 

The  real  cause  of  the  present  universal  derangement  of 
commerce  and  industry  must  be  ascertained  before  the  proper 
rem.edy  can  be  devised.  The  causes  assigned  are  various  and 
contradictory.  Many  of  them  never  had  any  existence  in  fact. 
Others  are  inadecpiate  or  absurd  in  themselves,  or  by  reason  of 
being  confined  to  narrow  localities  or  special  interests,  cannot 
have  produced  a  mischief  which  reaches  all  places  and  all  pro- 
ductive interests. 

Overproduction  is  one  of  those  alleged  causes,  although 
food,  clothing,  houses,  and  everything  useful  to  mankind,  are 
and  probably  always  will  l)e  in  deficiency  as  compared  with 
the  needs  of  them  if  the  means  w^ere  at  hand  to  purchase. 
The  constant  effort  of  the  human  race  is,  and  ought  to  be,  to 
multiply  production.  The  aggregate  effective  demand  for 
products,  that  is  to  say,  the  aggregate  demand  accompanied  by 
an  ability  to  purchase,  always  increases  with  production.  Sup- 
ply and  demand  mean  substantially  the  same  thing,  and  are 
nothing  l3ut  two  faces  of  the  same  fact.  Every  new  supply  of 
any  product  is  the  basis  of  a  new  demand  for  some  other  prod- 
uct. The  capacity  to  buy  is  measured  exactly  by  the  extent  of 
production,  when  the  medium  of  exchange  is  sufficient,  and 
there  is  practically  no  other  limit  to  consumption  than  the 
limit  of  the  means  of  payment.  Overproduction  of  particular 
things  may  occur,  but  that  is  soon  corrected  by  the  loss  of 
profits  in  their  production.  Overproduction  in  general  and  in 
the  aggregate  is  impossible  as  far  as  the  natural  and  positive  wants 
of  mankind  are  concerned.     The  contrary  opinion  \vi\\  be  held 


162  PHILOSOPHY    OF    BRICE. 

only  by  those  who  regret  the  discovery  of  the  steam-engine, 
the  spinning-jenny,  and  the  sewing  and  threshing  machines, 
and  who  believe  that  while  mankind  has  the  skill  to  devise 
methods  of  increased  production  they  have  no  capacity  to  pro- 
vide for  the  distribution  of  industrial  products.  Production  is 
the  sole  and  only  source  of  wealth,  and  in  fact  is  but  another 
name  for  wealth.  Overproduction  must  therefore  mean  super- 
abundant wealth,  and  the  idea  that  superabundant  wealth  or 
superabundant  facilities  for  producing  it  can  be  the  inciting 
cause  of  wide-spread  poverty  is  repugnant  to  the  common 
sense  of  mankind.  All  reputable  authorities  concur  in  treating 
the  idea  of  overproduction  as  the  idlest  of  fancies  and  wholly 
unworthy  of  serious  notice. 

Too  many  railroads  are  said  to  have  been  built,  when  it  is 
clear  there  is  an  urgent  need  for  more.  Undoubtedly  a  too 
rapid  construction  may  create  an  abnormal  demand  for  and  a 
rise  in  the  price  of  tlie  special  materials  required  in  railroad 
building,  and  may  possibly  cause  an  abnormal  advance  of  the 
interest  on  money  by  absorbing  too  much  floating  capital  in  a 
fixed  form,  but  such  evils  are  self-corrective.  Railroad  build- 
ing will  always  halt  under  such  circumstances  until  the  cost  of 
materials  and  of  capital  ceases  to  be  excessive.  The  tendency 
of  industry  to  take  profitable  directions,  and  to  withdraw  from 
tlK)se  fxjund  to  be  unprofitable,  needs  no  other  regulation  than 
to  be  let  alone. 

Money  sunk  in  railroads  prematurely  built  and  at  present 
unproductive,  is  another  cause  assigned  for  the  existing  condi- 
tion of  things.  But  the  loss  resulting  from  labor  misdirected 
is  no  greater  than  the  loss  resulting  from  the  non-employment 
of  labor.  One  single  year  of  the  loss  now  sustained  through 
the  stagnation  of  industry,  caused  by  falling  prices,  is  a 
calamity  of  greater  proportions  than  the  total  loss  from  all  the 
badly  planned  or  unfortunate  railroad  enterprises  of  a  decade. 
If  it  were  really  true  that  the  labor  lost  in  unproductive  works 


PKICE  AND  ITS  RELATION  TO  BrSlNESS.  163 

is  the  cause,  or  one  of  the  principal  causes,  of  the  present  dis- 
tress, the  future  must  be  dark  indeed  for  this  country,  which 
has  had  an  army  of  unemployed  laborers  since  1873  that  is  still 
being  recruited  as  industries  break  down,  one  after  another, 
under  a  shrinking  volume  of  money  and  falKng  prices.  If  a 
few  years  of  misdirected  labor  of  100,000  or  even  500,000  men, 
has  brought  on  conditions  under  which  3,000,000  are  forced 
to  be  idle,  the  evils  to  come  hereafter  from  the  present  idleness 
of  that  vast  number  must  be  incalculable  and  self -perpetuating. 
They  must  prove  an  endless  chain  freighted  with  a  constantly 
accumulating  volume  of  disaster,  a  Pandora's  box  with  hope 
left  out. 

That  species  of  speculation  in  property  and  securities 
which  is  described  as  reckless  and  unsound,  is  said  t®  be  one  of 
the  causes  of  the  present  distress.  But  even  in  gambling, 
there  can  be  no  more  lost  than  there  is  won,  and  the  material 
dam.age  to  the  community  cannot  exceed  the  worth  of  che  time 
of  those  engaged  in  it.  The  rating  of  property  at  higher  or 
lower  prices  could  not  result  in  a  destruction  of  the  property, 
or  even  in  the  impairment  of  its  productiveness.  It  would  be 
deplorable  if  it  were  true,  but  happily  it  is  wholly  uatrue,  that 
the  prosperity  of  the  prudent  and  industrious  is  ait  the  mej-cy 
of  gamblers,  of  whatever  species  or  degree. 

It  is  sometimes  said  that  what  is  being  witnessed  is  a  com- 
ing dowTi  to  solid  bottom  in  prices.  But  the  question  of  prices 
is  a  question  of  the  standard  in  which  they  are  meiisurcd. 
Wages  at  $2  per  day,  with  a  currency  of  gold  and  »ilve«*,  are 
as  much  on  solid  bottom  as  they  would  be  at  a  lower  range 
with  a  currency  of  gold  alone,  and  what  are  called  bottom  or 
bed-rock  prices  when  the  standai-d  is  gold,  would  in  tlieir  turn 
be  described  as  inflated  if  a  new  policy  should  decree  that 
money  should  consist  only  of  diamonds.  Prices  are  nothing 
but  the  expression  of  the  relation  between  money  and  othei- 
things,  and  in  the  end  cannot  express  it  otherwise  tha«r.  cwreet- 


1G4  PHILOSOPHY    OF  PRICE. 

]j,  and  when  so  expressed,  prices  are  at  tlie  bottom  wlierever 
that  may  be,  and  the  range  of  prices,  whether  higher  or  lower, 
depending  on  the  relation  between  the  volume  of  money  and 
other  things.  Money  is  bought  with  products.  Products  are 
l)ought  with  money.  An  increase  or  decrease  in  the  volume  of 
either  will  raise  or  lower  the  price. 

It  is  maintained  by  many  that  existing  evils  are  the  results 
of  a  loss  and  lack  of  confidence,  and  that  the  sufiicient  remedy 
Avould  be  found  in  its  restoration.  On  all  occasions  they  por- 
tray in  glowing  plirase  the  abounding  prosperity  which  would 
follow  if  moneyed  and  other  capitalists  would  freely  exhibit 
confidence  by  inaugurating  industrial  and  commercial  enter- 
])rises.  But  it  is  to  be  observed  that  they  content  themselves 
with  recommending  confidence  to  others,  while  they  are  care- 
ful not  to  make  a  practical  exhibition  of  any  on  their  own  part. 
They  seem,  in  short,  to  be  unconsciously  influenced  by  the 
view  that  while  they  might  profit  by  the  confidence  of  others, 
confidence  on  their  own  part  might  involve  them  in  losses. 
The  real  mischief  is  not  the  lack  of  confidence,  but  the  lack  of 
any  legitimate  grounds  for  confidence,  and  tliere  neither  will 
be,  nor  ought  to  be,  any  revival  or  extension  of  confidence,  so 
long  as  the  volume  of  money  continues  to  shrink,  and  prices 
continue  to  fall.  The  word  "  courage  "  and  not  "  confidence  " 
t^hould  be  used  in  this  connection,  for  it  implies  the  hardihood 
to  face  imminent  and  certain  danger.  Under  existing  condi- 
tions, if  by  any  possil)ility  confidence  could  l)e  inspired,  the 
consequences  would  be  baneful  rather  than  beneficial. 

Similar  conditions  to  those  which  preceded  the  panic  of 
1873,  in  the  main,  exist  to-day.  The  volume  of  money  is 
shrinking  absolutely  and  relatively  to  otlier  things,  although 
perl  laps  not  as  rapidly  as  between  1865  and  1873,  and  the 
prices  of  property  are  gradually  shriveling.  The  principal  dif- 
ference is,  that  since  1873,  the  credits  extended  by  moneyed 
institutions  have  been  largely  curtailed  or  cut  off  altogether, 


PEICE  AXD  ITS  EELATIOX  TO  BUSINESS.  1G5 

and  consequently  the  material  of  which  panics  are  made  is  not 
in  as  great  abundance  as  then.  The  collapses  which  are  con- 
stantly occurring  do  not  make  as  much  noise,  nor  attract  as 
much  attention  as  the  explosion  of  1873,  because  they  do  not 
occur  simultaneously  and  conspicuously  ^vith  public  institu- 
tions, such  as  banks,  in  1873,  but  nevertheless  they  are  con- 
stantly taking  place  in  all  parts  of  the  country,  and  in  increas- 
ing numbers.  All  that  is  necessary  to  change  this  monotonous 
clatter  of  isolated  collapses  into  a  general  crash  is  to  restore  a 
courageous  confidence  and  credit  without  any  change  in  exist- 
ing conditions.  As  the  collapse  of  1873  is  generally  attributed 
to  an  overextension  of  confidence  and  credit,  a  restoration  of 
such  confidence  now,  when  the  conditions  are  the  same,  must 
pave  the  way  to  a  new  collapse  and  would  be  placing  dynamite 
for  future  explosions  under  the  foundations  of  business. 

It  is  very  necessary  to  understand  in  what  particulars  con- 
fidence has  been  lost  before  deciding  that  its  healthy  restera- 
tion  is  either  possible  or  under  existing  conditions,  desirable. 
It  has  not  been  lost  in  the  intrinsic  value  of  real  estate  or  of 
any  useful  thing.  It  has  not  been  lost  in  the  fruitfulness  of 
the  soil,  or  in  the  ingenuity,  industry,  or  integrity  of  the  peo- 
ple, the  stability  of  the  Government,  or  in  the  productive 
powers  of  labor  and  machinery.  Confidence  has  not  been  lost 
in  anything  except  the  possibility  of  maintaining  prices  Avhile 
the  volume  of  money  is  being  shrunk  by  existing  legislation. 
Confidence  has  been  lost  in  the  idea  that  capital  invested  in 
productive  enterprises  can  be  retm-ned  with  a  profit,  or  even 
intact,  to  the  investors.  Its  restoration  while  present  condi- 
tions remain  is  impossible,  and  would  work  mischief  if  it  were 
possible. 

It  is  stoutly  affirmed  by  many  that  the  present  stagnation 
is  tlie  result  of  uncertainty  as  to  the  future  value  of  the  paper 
money  of  the  country.  If  there  were  any  such  uncertainty, 
and  consequently,  if  there  were  possibilities  of  a  rise  as  well 


106  PHILOSOPHY  OF    PEICE. 

as  of  a  fall  in  prices,  the  adventurous  temper  of  the  business 
men  and  the  people  generally  would  cause  active  investments 
and  purchases,  as  was  illustrated  during  and  immediately  after 
the  civil  war,  when  such  an  uncertainty  really  existed.  The 
true  cause  of  the  stagnation  is  to  be  found  in  the  opposite  fact. 
Instead  of  it  being  an  uncertainty  as  to  the  future  value  of  pa- 
per money,  it  is  the  absolute  certainty  that,  under  present  leg- 
islation, paper  money  must  still  increase  in  value,  and  that 
prices  must  continue  to  fall. 

From  the  facts,  figures  and  statistics  given  in  this  chapter 
we  cannot  shut  our  eyes  to  the  truth  that  price  is  the  controll- 
ing factor  in  business.  There  can  be  no  business  without  it, 
and  the  greater  the  price  the  greater  will  be  the  aggregate  of 
business  done.  We  also  learn  that  the  relation  existing  between 
pnce  and  business  is  of  such  a  character  that  both  rise  or  fall 
together.  The  factor  which  commands  and  controls  both  is 
tlie  volume  of  currency.  In  a  previous  chapter  I  have  shown 
very  plainly  that  price  depends  upon  the  amount  of  currency 
in  circulation  in  the  nation  where  the  price  is  established.  I 
have  shown  in  this  chapter  how  business  depends  upon  price, 
and  that  both  are  entirely  dependent  upon  the  amount  of  cur- 
rency in  use. 

"As  before  stated,  money  is  a  standard  of  payment^  fixed 
and  immutahle.  You  can,  l)y  changing  the  quantity  of  the 
money,  or  the  quantity  of  the  uses  for  the  money,  make  it 
necessary  for  you  to  part  with  more  of  your  labor  or  your  prop- 
erty— to  any  conceivable  extent — in  order  to  obtain  a  dollar, 
but  when  obtained  it  will  not  pay  one  whit  more  of  your 
do])ts.  By  chanaing  the  quantity  of  the  money,  or  hy  ornit- 
ti/iiq  to  increase  it  as  the  uses  for  it  increase,  you  change  the 
price  that  can  he  had  for  your  property  or  your  labor,  hut  you 
do  not  chart ge  the  debt;  that  stands  as  fixed  and  unclw/nging 
as  the  north  starP 


KIND   AND   AMOUNT   OF    CHRSEKCY.  1G7 


CHAPTEE  IV. 

KIND   AND   AMOUNT   OF   CUKRENCT. 

"We  want  a  currency  thoroughly  American.  One  that 
will  represent  our  peculiar  American  ideas  and  traits  of  char- 
acter. A  currency  that  carries  with  its  use  independence  of 
thought,  coupled  with  that  advanced  and  enlarged  conception 
of  social  and  business  life  now  constituting  the  one  great  fea- 
ture of  Americanism.  There  are  but  few  things — in  fact  a 
full-fledged  native  American  has  but  little  in  his  composition — 
found  in  common  with  citizens  of  other  countries.  Our  great 
lakes  and  rivers,  our  vast  forests  and  broad  prairies,  our  diver- 
sity of  soil  and  climate,  our  high  mountains  and  rich  valleys, 
our  enormous  treasures  in  minerals,  the  constant  push  and  hur- 
ry of  trade — all  conspire  to  broaden  and  deepen  the  minds  of 
an  American  citizen  upon  all  economic  subjects  far  beyond 
that  of  any  other  nationality.  "We,  as  a  nation,  have  but  little 
in  common  with  the  balance  of  the  world  that  can  affect  our 
financial  sy^em  or  the  measure  of  our  productive  industries 
that  brains  and  energy  cannot  improve.  We  ignore  their  cus- 
toms, despise  their  laws  and,  as  a  rule,  are  indifferent  to  their 
teachings.  In  our  national  affairs  our  actions  are  governed — 
and  almost  everything  is  done — from  our  own  conceptions  of 
justice  and  equity  among  the  citizens  of  this  Kepublic ;  and 
we  ask  no  concurrence  in  our  measures  by  the  balance  of  man- 
kind. We  are  a  distinctive  people,  isolated  connnercially,  in- 
dependent socially;  and  by  habit,  thought  and  teaching  are 


1C8  PHILOSOPHY    OF  PRICE. 

continually  diverging  from  the  beaten  paths  of  other  nations. 
Our  ideas  of  trade  and  commercial  intercourse  with  nations, 
colonies  and  dependencies  are  inimical  to  those  of  any  other 
country.  Being  thus  independent  in  almost  every  other  re- 
spect, why  should  we  not  have  a  distinctive  Am^erican  system 
of  currency  ?  AVhy  should  not  this  great  and  progressive  Re- 
public take  care  of  its  own  financial  system,  and  have  a  cur- 
rency that  will  completely  represent  and  promote  the  economic 
ideas  of  our  own  people.  If  other  nations  are  not  satisfied 
with  it,  and  will  not  accept  it,  as  reaching  their  conceptions  of 
what  a  national  currency  should  be,  we  are  surely  in  a  condi- 
tion to  assume  the  responsi1)ility  of  the  issue.  TVe  are  com- 
mercially, financially  and  intellectually  qualified  to  stand  the 
pressure  of  such  national  isolation.  "We  forget  that  other  na- 
tions have  far  more  need  of  us  than  we  have  of  them.  We  do 
not  always  remember  that  our  products  are  only  taken  when 
they  can  be  purchased  the  cheapest ;  that  prejudice,  friendship 
and  national  lines  are  entirely  lost  sight  of  in  the  great  strug- 
gle for  commercial  ascendency. 

All  that  the  nations  of  Europe  have  done  for  us,  by  ex- 
ample and  otherwise,  has  proven  a  positive  injury  and  impedi- 
ment to  our  progress.  Our  very  existence  as  a  Government 
would  be  wiped  out  by  them  if  it  were  possible.  Why,  then, 
should  we  be  compelled  to  accept  their  system  of  currency  ?  A 
system  fashioned  and  molded  by  the  royal  and  aristocratic 
hands  of  kings,  emperors  and  money -lords,  to  the  end  that 
equity  and  justice  in  commercial  exchanges  might  be  wrested 
from  the  producers  of  wealth.  Such  a  system,  if  fully  adopt- 
ed liere  and  put  into  constant  effect  l^y  the  Government,  would 
in  time  produce  the  same  results  as  in  Europe.  Even  now  we 
arc  beginning  to  realize  the  existence  of  a  similar  condition. 

We  want  a  circulating  medium  exclusively  our  own ;  one 
that  will  not  force  itself  beyond  the  boundaries  of  our  own 
country.     We  do  not  want  our  money  made  of  so  valuable  a 


KI^'D   AND   AMOUNT   OF   CUKKENCY.  169 

material  as  to  be  sought  for  abroad.  We  want  it  kept  in  use 
at  home,  so  that  we  may  enjoy  the  benefits  and  reap  tlie  re- 
wards of  its  influence  on  the  great  business  interests  of  our 
people.  We  want  much  less  talk  about  that  impossible  thing, 
"  the  money  of  the  world,"  and  much  more  action  in  regard  to 
what  shall  be  the  money  of  America. 

It  is  not  generally  known  that  at  the  present  time  our 
Government  has  commissioned  a  gentleman  to  take  in  the 
sights  of  ths  Oiu  World,  and,  as  he  journeys  along,  ask  &uch 
non-partisans  as  Gladstone,  Bismarck  and  others,  as  to  the  wis- 
dom or  unwisdom  of  continuing  the  coinage  of  silver.  Such 
childlike  simplicity  in  these  times  of  intrigue  and  deception  is, 
to  say  the  least,  refreshing.  Of  course,  their  advice,  under  the 
circumstances,  would  bear  the  stamp  of  disinterestedness. 
What  a  spectacle  for  60  millions  of  intelligent  people  to  wit- 
ness !  Where  are  our  statesmen,  our  scholars  and  other  men 
of  brains  ?  Are  we  bankrupt  in  tliat  respect,  or  are  they  fol- 
lowing their  plows  and  forging  at  their  anvils  ?  The  latter  is 
probably  true. 

We  hear  and  read  much  concerning  the  stability  of  for- 
eign ideas  regarding  mone}' ;  that  we  must  copy  and  endorse 
their  customs  and  laws,  or  so  much  of  them  as  affect  our  finan- 
cial condition.  Were  that  the  case,  we  would  make  a  sorry 
mess  of  it.  • 

Professor  Levi  says : 

"  Frightened,  and  not  without  reason,  at  the  x>os8ible  con- 
sequences, some  countries  heretofore  anxious  to  attract  and  re- 
tain gold  in  circulation,  even  at  great  sacrifices,  showed  a  fever- 
ish anxiety  to  banish  it  altogether.  In  July,  1850,  Holland  de- 
monetized the  gold  ten-florin  piece  and  tlie  Guillaume.  Por- 
tugal prohibited  any  gold  from  having  current  value  except 
the  English  sovereign.  Belgium  demonetized  lier  guld  circu- 
lation (that  is,  repealed  the  laws  making  it  legal  money).  Kus- 
sia  prohibited  the  export  of  silver ;  and  France,  alarmed  but 
less  hasty,  issued  a  commission  to  look  into  the  mat-ter.'" 

In  1855  Germany  demonetized  gold,  and  made  silver  the 


170  PHILOSOPHY     OF    PRICE. 

only  legal  money.  But  in  1870,  after  the  silver  mines  had  1)e- 
gim  to  issne  vast  smns  of  silver  money,  and  the  annual  issue  of 
gold  money  had  declined  from  1-16  millions  to  98  millions,  she 
demonetized  silver  and  made  gold  the  only  legal  money. 

I  might  give  similar  instances  of  fluctuations  and  changes 
ill  the  views  of  European  nations  in  regard  to  the  use  of  the 
precious  metals  as  money.  From  those  given  we  learn  that 
even  those  nations  which  have  existed  longest  are  not  fully  de- 
termined upon  any  fixed  line  of  action.  We  infer  from  this 
tliat  there  is  a  probable  chance  for  improvement  with  them. 
Hence  I  claim  as  we  are  or  ought  to  be  a  distinctive  nation  in 
nearly  all  that  the  term  implies,  an  effort  on  our  part  to  im- 
prove the  methods  of  issuing  a  circulating  medium  would  not, 
if  disastrous,  stand  alone. 

In  a  literal  sense  every  nation  has  a  distinctive  circulating 
medium  and  no  other,  for  there  is  no  such  thing  as  "  a  money 
of  the  world"  any  more  than  there  is  a  market  of  the  world. 
Where  the  market  or  tlie  money  is  found,  it  is  evident  that 
both  or  either  exist  under  the  laws  and  regulations  governing 
traftic  in  each  individual  nation.  What  I  intend  to  convey  is, 
a  currency  not  differing  in  its  organic  construction  from  that 
of  otlier  nations.  ISTothino-  could  be  more  disastrous  to  trade 
and  commerce  than  for  all  nations  to  adopt  the  same  monetary 
system.     Wliat  affected  one,  in  such  a  case,  would  affect  all. 

In  Holland  silver  was  the  sole  standard  until  1816.  In 
that  year  the  double  standard  was  adopted  with  the  legal  rela- 
tion between  the  metals  of  15.873  to  1,  which  undervalued  sil- 
ver and  practically  banished  it  from  the  circulation.  In  1847 
silver  was  again  ado}>ted  a^  the  sole  standard,  not,  as  claimed 
by  some,  in  consequence  of  the  discovery  of  gold  in  California, 
but  just  before  that  event.  The  principal  reason  assigned  by 
the  statesmen  of  Holland  for  this  change  in  1847  was,  that  it 
had  ])roved  disastrous  to  the  commercial  and  industrial  interests 
of  Holland  to  have  a  money  system  identical  with  that  of  Eng- 


KIND   AND   AJVIOUNT   OF   CUERENCY.  171 

land,  whose  financial  re^nilsions,  after  its  adoption  of  the  gold 
standard,  had  been  more  frequent  and  more  severe  than  in  any 
other  country,  and  whose  injurious  effects  were  felt  in  Holland 
scarcely  less  than  in  England.  They  maintained  that  the  adop- 
tion of  the  silver  standard  would  prevent  England  from  dis- 
turbing the  internal  trade  of  Holland  by  draining  off  its  mon- 
ey during  such  revulsions,  and  would  secure  immunity  from 
evils  which  did  not  orio-inate  in  and  for  which  Holland  was 
not  responsible. 

This  proposition  is  undoubtedly  sound,  and  is  being  so 
recognized  by  the  best  economic  writers  on  both  sides  of  the 
water. 

As  the  most  important  function  of  money  is  to  measure 
values  and  to  establish  equities  in  time  transactions,  the  great 
bulk  of  which  are  internal  and  between  citizens  of  the  same 
country,  and  all  of  which  are  expressed  in  the  money  of  some  par- 
ticular country,  it  follows  that  any  system  of  money  that  is 
common  to  several  countries  is  a  vicious  one,  in  that  it  subjects 
the  entire  internal  business  of  each  of  them  to  all  the  disasters 
originating  in  the  political  or  financial  mismanagement  of  the 
Government,  or  in  the  political  disturbances,  follies,  misfor- 
tunes, or  reckless  speculations  of  the  inhabitants,  of  any  one 
or  all  of  the  others.  That  money  is  simply  the  instrument  of 
commerce  and  industry  and  not  their  object ;  that  a  sufficiency 
of  it  is  better  than  more,  and  infinitely  better  than  less ;  that 
the  outflow  of  money  from  one  country  to  another  having 
money  systems  in  common,  is  a  double  injury.  It  is  an  injury 
to  the  country  that  receives  it  and  a  greater  injury  to  the  coun- 
try that  parts  with  it.  It  tends  in  the  one  instance  to  produce 
crises  by  inflation,  and  in  the  other  panics  through  contraction. 
And  that  in  addition  to  this  is  an  injury  to  each  on  account  of 
the  derangement  of  the  trade  of  the  other ;  that  their  inven- 
tion of  money  is  but  half  completed  when  the  necessary  lim- 
itations and  regulations  of  its  quantity,  and  consequently  of  its 


172  PHILOSOPHY     OF    PRICE. 

value,  are  remitted  not  only  to  the  vicissitudes  and  chances  of 
mining,  but  to  the  vicissitudes  in  the  business  and  legislation 
of  foreign  countries ;  that  these  facts  and  considerations,  and 
many  others  which  might  be  urged,  show  that  metallic  money 
is  an  inaccurate  money,  and  fills  only  in  a  moderate  degree  any 
of  the  requirements  of  a  perfect  system,  while,  in  essential 
particulars,  it  so  far  fails  to  fill  them  as  to  render  it  unfit  for 
an  advanced  civilization. 

On  the  other  hand,  every  requirement  of  a  perfect  system 
can  be  met  more  nearly  and  more  certainly  by  paper  money 
than  by  any  other  ever  devised.  Not  paper  money  based  upon 
gold,  silver,  or  any  other  fluctuatiiig  commodity,  whole  meas- 
ure it  should  be,  nor  upon  a  promise  of  commodities,  near  or 
remote,  definite  or  indefinite,  of  governments  or  banks ;  nor 
like  the  French  assignats,  based  upon  lands ;  nor  fastened  to 
gold  or  silver  by  a  chain  sure  to  snap  when  the  metals  are 
wanted ;  nor  convertible  into  bonds  and  thereby  offering  the 
bribe  of  interest  for  its  withdrawal  from  circulation ;  nor  of 
any  use  to  its  owner  except  when  parted  with ;  nor  capable  of 
yielding  profit  except  when  employed  in  the  production  and 
distribution  of  wealth  ;  but  an  absolute  mone}^,  wdiose  value^ 
conferred  by  the  sovereign  authority,  and  regulated  by  a  pre- 
arranged and  perfected  system,  and  not -by  the  passions  and 
caprices  of  the  hour,  would  rest  impregnably  on  functions  es- 
sential to_^  civilization  and  jjrogress. 

Bryant,  in  his  discussion  of  the  question,  says : 

"  Tlie  2)ov)er  of  money  to  fix  the  condition  of  man  in  all 
human  affairs,  is  supreme,  absolute — sovereign. 

The  condition,  then,  of  those  who  gain  the  money  must 
rise,  while  tlie  condition  of  those  who  lose  it  raust  sink — no 
alternative  is  jxtssihle.  Hence,  to  possess  tlic  money  becomes, 
as  it  were,  tlie  life-and-deatli  struggle  of  civilization — of  man's 
existence.  Now,  it  is  obvious  tliat,  if  the  money  of  several 
nations  he  of  the  same  kinci — in  fact  or  in  principle — then  tliis 
■iiterciless  struggle  for  the  money — -for  existence — will  be  of 
one  natioi^  against  all  the  others,  and  of  all  against  all. 

To  make  a  money  that  is  common  to  several  nations  is  to 


KIND   AND   AMOUNT    OF   CUKKENCY.  173 

set  up  a  huge  auction-block,  upon  '.vliich  Prices  will  officiate 
as  a  heartless  and  soulless  auctioneer.  The  money  will  be 
knocked  down  to  those  who  bid  the  most  for  it — of  their  labor 
or  its  productions. 

The  highest  bidders  for  the  money  will  ever  be  those 
whose  necessities  are  the  greatest. 

What  the  necessities  of  a  people  are,  is  largely  fixed  by 
the  institutions — the  government — under  which  they  live.  That 
great  statesman,  Lord  Chatham,  has  most  truly  and  wisely  said : 
'The  ruin  ox  -prosperity  of  a  state  depends  so  much  upon  the 
administration  of  its  government,  that,  to  be  acquainted  with 
the  merit  of  a  ministry,  we  need  only  observe  the  condition  of 
the  peopled 

If  among  these  several  nations  having  the  same  Icind  of 
money — in  fact  or  in  principle — there  is  even  one  nation  whose 
institutions  are  such  as  enslave  the  masses  to  an  aristocracy  who 
own  the  capital  and  the  land,  then  that  curse  spreads  itself — 
inevitahly — over  all  the  other  nations.  The  necessities  and 
miserahle  condition  of  that  people  forces  them  to  offer  the 
most  of  their  labor  or  its  productions  for  the  money.  As  the 
money  flows  to  them  their  condition  rises — they  prosper.  But 
those  from  whom  it  ebbs,  sink.  Is  or  can  any  human  power 
arrest  their  sinking  condition,  until  they  have  reached  a  point 
where  their  necessities  make  them  the  highest  bidders  for  the 
money.  A  system  of  money  common  to  several  nations  guar- 
antees two  things :  First,  that  the  condition  of  the  producing 
and  industrial  classes  will  be  about  the  same  in  each  and  all. 
And  the  condition  of  these  classes  fixes  the  condition  of  fully 
85  per  cent  of  the  total  population.  The  condition  of  the 
manufacturer  for  home  consumption,  the  merchant,  the  profes- 
sional man,  etc.,  etc.,  sinks  with  the  foundation.  Second:  It 
guarantees  that  no  one  of  the  nations  will  ever  enjoy  more 
than  three  or  four  successive  years  of  prosperity.  Their  pros- 
perity is  ever  l)orn  of  the  di^'e  necessity  which  forces  them  to 
bid  the  most  for  the  money ;  but  in  gaining  it  they  reduce 
some  other  nation  to  adversity,  which,  in  turn,  bids  it  away 
from  them  again.  It  is  a  tide  that  ebbs  and  flows  like  that  of 
the  seas.  In  connection  M'ith  this,  it  is  of  the  highest  import- 
ance to  consider  the  following  fact,  namely :  For  each  year 
of  p>rosperity  there  will  be  four  or  five  of  adversity ;  for  a  pe- 
riod of  three  or  four  yeai^s  of  prosperity  there  will  be  one  of 
twelve  to  fifteen  of  adversity.  The  prosperity  of  the^^^^  years 
is  due  to  the  fact  that  the  purchasing  power  or  value  of  money 
is  sinking,  while  that  of  labor  and  its  productions  are  rising — 


174  PHILOSOPHY    OF    PRICE. 

less  and  less  of  labor  and  its  productions  going  to  the  money- 
loaner,  and  more  and  more  to  general  society.  The  inany 
years  of  adversity  are  due  to  the  opposite  fact — more  and  more 
of  labor  and  its  productions  are  required  to  cancel  the  demands 
of  the  money-loaner,  and  less  and  less  are  left  to  the  patronage 
of  general  society.  So  that,  while  it  is  a  system  of  money  that 
sometimes  bears  upon  the  money-loaner,  we  see  that  for  each 
year  of  his  adversity  he  is  enriched  by  four  or  five  of  prosper- 
ity ;  while  general  society  has  five  of  adversity  to  one  of  pros- 
perity. Society  always  gets  into  debt  to  the  money-loaner 
wheyi  the  value  of  the  mxyney  is  depreciated,  and  is  forced  ta 
go  out  of  debt  wherv  its  value  is  appreciated;  wJien  it  horrows 
two  dollars  it  obtains  one  day^s  work,  and  when  it  pays  the 
two  dollars  it  gives  two  days'  work;  and  merchants  and  others — 
supposed  to  be  intelligent — say  that  it  is  '  hard  times.'  The 
periods  1812  to  1816,  1834  to  1837,  1853  to  1857,  in  all  a  peri- 
od of  eleven  years,  were  '  good  times ' — in  each  there  was  a 
great  increase  in  the  quantity  of  the  money.  From  1817  to 
1833,  1838  to  1852,  and  1858  to  1872— but  for  the  war— in  all, 
a  period  of  44  years,  were  '  bad  times,' — in  each  there  was  an 
enormous  contraction  of  the  money.  It  is  four  or  five  to  one 
in  favor  of  the  money-loaner.  And,  as  an  inevitable  conse- 
quence, that  portion  of  society  which  produces  all  the  wealth 
are  largely  bankrupts  or  paupers,  while  those  who  do  not  pro- 
duce a  single  farthing  of  it  are  largely  millionaires.  And  all 
that  portion  of  society  subsisting  between  the  money-loaner 
and  the  producer  are  ever  seized  with  the  '  chills  and  fever,' — 
a  short  season  of  fever  and  a  long  one  of  chills.''^ 

No  matter  how  large  or  small  the  exchanges  are  between 
nations,  the  diffe'rence  must  be  leveled  up  with  commodities. 
The  balancing  commodity  used  may  be  either  wheat,  corn, 
meat,  gold  or  silver ;  yet,  it  must  be  paid  out  and  received  as 
an  article  of  commerce  having  its  value  fixed  by  the  nation  re- 
ceiving it.  Nothing  American  is  money  when  taken  from 
under  the  jurisdiction  of  the  stars  and  stripes.  All  articles  of 
commerce  are  then  simply  exported  commodities,  and  are  put 
upon  the  market  at  a  price  to  be  fixed  by  foreign  purchasers. 
We  are  told  that  gold  and  silver  are  the  recognized  money  of 
the  world.  That  is  an  error.  Th^  gold  and  silver  coins  of 
one  nation  are  received  by  another  only  as  so  much  bullion. 


KIND    AND    AMOUNT   OF   CURRENCY.  175 

and  its  value  is  estimated  by  its  weight  and  fineness.  Wlieat, 
cotton,  meat  and  manufactured  articles  are  used  as  the  basis  of 
more  foreign  exchange  in  one  week  than  gold  and  silver  is  in 
a  whole  year.  Gold,  silver,  copper  and  iron  are  the  products 
of  labor  the  same  as  all  the  other  articles  enumerated,  and  all 
nations,  in  their  exchanges,  treat  them  as  such ;  consequently, 
the  domestic  currency  of  a  nation  does  not,  in  the  least,  con- 
flict with  its  foreign  commerce.  This  being  true,  of  what  ben- 
efit is  an  expensive  currency  to  any  nation  ?  The  more  pre- 
eioHS  the  material  the  more  ex-pensive  the  currency.  If  gold 
was  the  only  metal  used  for  money,  it  would  cost  much  more 
than  silver,  and  if  silver  was  the  only  metal  used  it  would  cost 
much  more  than  gold,  while  paper  costs  comparatively  noth- 
ing. The  entire  expense  of  a  dear  currency  is  made  simply  to 
gratify  an  exploded  idea.  Outside  of  the  legal  quality  that 
goes  with  the  stamp  of  the  government  is  the  guarantee  that 
the  metal  upon  which  it  is  impressed  is  of  a  certain  weight 
and  fineness.  Of  what  use  to  the  people,  then,  is  all  tliis  ex- 
pense of  coining  gold  and  silver  into  money  when  it  can  be 
used  as  such  only  among  ourselves  ?  When  used  abroad  it  is 
weighed  and  bought  as  produce,  notwithstanding  its  costly  and 
handsome  coinage.  Why  not  keep  it  in  bullion,  and  when  an 
adverse  balance  is  to  be  settled,  send  it  in  that  form  in  payment 
of  the  difference,  if  required. 

As  I  said  before,  both  gold  and  silver  are  too  expensive 
for  the  uses  they  are  put  to  as  legal  money.  For  instance,  take 
a  paper  dollar  and  a  gold  dollar.  Suppose  both  are  lost  at  sea, 
what  is  the  difference  in  the  effect  of  their  loss  ?  With  the  pa- 
per dollar  the  individual  loses  a  dollar  in  value,  and  the  nation 
gains  it.  With  the  gold  dollar  both  the  individual  and  the 
nation  are  losers — two  dollars  are  lost,  for  the  nation  paid  an 
equivalent  for  the  metal  before  it  was  coined.  This,  of  itself, 
amounts  to  a  large  sum  in  the  course  of  years.  Of  the  45 
millions  of  fractional  currency  issued,  15  millions  have  been 


176  PHILOSOPHY    OF    PRICE. 

lost  or  destroyed.  This  would  happen  with  silver  or  gold  cer- 
titieates  in  like  manner — the  nation  would  gain  what  the  indi- 
vidual lost,  instead  of  both  being  losers  in  the  same  calamity. 

I  do  not  believe  in  deceiving  the  people  in  any  manner, 
much  less  in  regard  to  the  great  question  of  domestic  currency. 
Squarely  and  honestly  told,  the  only  money  in  this  nation  to- 
day is  gold  and  silver  coin ;  all  else  is  a  fraud,  a  delusion  in- 
spired by  undue  confidence  in  a  coin  basis.  National  bank 
bills  are  redeemable  in  greenbacks,  and  greenbacks  are  redeem- 
able in  coin.  Now,  if  the  people  should  bring  all  their  prom- 
ises to  pay  to  the  banks  and  treasuries  of  the  United  States, 
and  demand  their  redemption  at  one  time,  the  nation  woHld 
suspend  payment,  become  bankrupt,  and  the  l^anks  would 
prove  insolvent.  "We  are  led  to  believe  that  there  is  a  coin 
dollar  back  of  each  paper  dollar  that  is  in  circulation.  This  is 
not  true.  National  bank  bills  are  redeemable  in  o-reenbacks. 
These  banks  had  in  circulation  Oct.  1,  1885,  $268,869,597. 
The  amount  of  greenbacks  outstanding  at  that  date  vras  $3-16,- 
681,016,  making  a  total  of  8615,550,613.  To  redeem  this 
amount  the  Government  held  $100,000,000.  Here  is  an  exam- 
ple of  100  millions  of  money  secured  by  a  coin  reserve  and 
515  millions  of  absolute  frauds. 

Ask  one  hundred  men  you  may  meet  in  your  walk,  if  our 
currency  national  bank  bills  and  greenbacks  have  a  coin  reserve 
to  protect  their  redemption,  and  ninety-nine  will  say  they  have. 
When,  in  fact,  the  only  issue  that  has  an  absolute  coin  basis  is 
the  certificates  which  are  not  leoral  tender.  Domestic  currency 
is  one  thing,  but  legal  money  is  another.  This  paper  money 
the  Government  and  banks  compel  the  people  to  receive  in 
payment  of  all  their  dues,  but  the  Government,  under  the 
present  law,  can  only  receive  it  from  the  people  for  certain 
specified  payments,  and  for  this  reason  I  claim  again  it  is  a 
fraud.  If  an  individual  will  not  take  his  own  debt  in  pay- 
ment for  a  credit  he  holds,  plain  people  will  call  him  a  scoun- 


KIND   AND    AMOUNT   OF   CURRENCY.  177 

drel,  and  justly,  too.  All  this  masquerading  and  financial  jug- 
glery is  concocted  simply  to  deceive  a  trusting  people,  with  the 
object  of  robbing  them  of  their  earnings.  AVhy  not  present 
the  bare  facts,  cut  the  niatter  oj^en,  and  let  the  light  of  wisdom 
and  common  sense  in  to  dispel  the  darkness  ? 

I  would  have  gold  and  silver,  if  they  are  to  be  used  as 
money,  coined  free  and  unlimited,  or  gold  and  silver  certifi- 
cates issued  on  bullion  deposited  at  any  of  the  mints  or  sul> 
treasuries,  equal  to  the  amount  of  coin,  and  in  convenient  de- 
nominations for  circulation.  That  much  currency  would  be 
bottomed  on  the  precious  metals.  Then  I  would  issue  Govern- 
ment motes  or  greenbacks  in  suflicient  quantities  to  give  the 
people  currency  enough  to  keep  capital,  labor  and  its  products 
independent  of  each  other,  and  bottom  this  issue  on  taxation. 
Let  the  Government  pay  it  to  the  people  for  what  it  wants  of 
their  labor,  and  products,  and  receive  it  of  the  people  for  all 
dues.  AYith  such  a  currency  there  could  be  no  deception  nor 
depreciation. 

I  quote  from  Thomas  Jefferson  on  this  question : 

"  And  so  the  nation  may  continue  to  issue  its  bills  as  far 
as  its  wants  require  and  the  limits  of  its  circulation  will  permit. 
Those  limits  are  understood  to  extend  with  us  at  present  to 
$200,000,000,  a  greater  sum  than  would  be  necessary  for  any 
war.  But  this,  the  only  resource  which  the  Government  could 
command  with  certainty,  tlie  States  have  unfortunately  fooled 
away,  nay,  corruptly  alienated  to  swindlers  and  shavers,  under 
the  cover  of  private  banks.  Say,  too,  as  an  additional  evil, 
that  the  disposal  fuijds  of  individuals  to  this  great  amount 
have  thus  been  withdrawn  from  improvement  and  useful  enter- 
prise, and  employed  in  the  useless,  usurious  and  demoralizing 
practices  of  bank  directors  and  their  accomplices.  In  the  war 
C'f  1755  our  State  availed  itself  of  this  fund  by  issuing  a  paper 
money  bottomed  on  a  specific  tax  for  its  redemption,  and  to  in- 
sure its  credit,  bearing  an  interest  of  5  per  cent.  Witliiu  a 
very  short  time  not  a  bill  of  this  emission  was  to  be  found  in 
circulation.  It  was  locked  up  in  the  chests  of  executors,  guar- 
dians,  widows,  farmers,  etc.  We  then  issued  bills  bottomed  on 
a  redeeming  tax,  l)ut  bearing  no  interest.     These  were  readily 


178  PHILOSOPHY  OF  PRICE. 

received,  and  never  depreciated  a  single  farthing. — Opinions 
of  Thomas  Jefferson  in  1813;  his  letters  to  John  Tv.  Epps, 
June  24,  1813 ;  JeffersoniS  Worlds,  volume  4,  pages  40,  41. 

The  question  will  be  asked,  and  ought  to  be  looked  at, 
what  is  to  be  the  recourse  if  loans  cannot  be  obtained  ?  There 
is  but  one — ''^Carthago  delenda  estP  Bank  paper  must  be 
suppressed,  and  the  circulating  medium  must  be  restored  to 
the  nation  to  whom  it  belongs.  It  is  the  only  fund  on  which 
they  can  rely  for  loans  ;  it  is  the  only  recourse  which  can  never 
fail  them,  and  it  is  an  abundant  one  for  every  necessary  pur- 
pose. Treasury  bills,  bottomed  on  taxes,  bearing  or  not  bear- 
ing interest,  as  may  be  found  necessary,  thro^'m  into  circula- 
tion will  take  the  place  of  so  much  gold  and  silver,  which  last, 
when  crowded,  will  find  an  efflux  into  other  countries,  and 
thus  keep  the  quantum  of  medium  at  its  salutary  level.  Let 
banks  continue,  if  they  please,  but  let  them  discount  for  cash 
alone  or  for  Treasury  notes." — Letter  September  11,  1S13,  vol- 
ume 6,  pages  199,  200,  201. 

Bear  in  mind  the  first  issue  of  our  greenbacks  was  upon 
this  identical  plan.  They  were  received  and  taken  for  all  dues, 
and  in  consequence  remained  equal  ^v\Xh.  gold  and  silver,  while 
those  subsequently  issued  under  a  law  discriminating  as  to 
their  uses,  to  a  large  extent  depreciated  in  value.  Or,  if  this 
will  not  do,  I  would  demonetize  both  gold  and  silver,  and  issue 
all  the  currency  direct  from  the  Government  in  legal  tender 
notes.  For  my  part,  I  am  inclined  to  the  latter  idea.  It  would 
avoid  confusion  and  deception  regarding  the  true  status  of  our 
currency,  and  make  it  unnecessary  to  further  discuss  the  ques- 
tion of  a  single  or  double  standard  of  payments.  It  would  en- 
tirely eliminate  the  little  understood  question  of  a  ratio  be- 
tween the  two  metals,  and  give  us  a  currency  that  could  not  be 
increased  or  decreased  in  value  only  by  limitation  in  quantity, 
which  legislation  could  regulate.  Every  nation  of  the  world 
is,  at  the  present  time,  trying  to  solve  this  greatest  factor  in 
human  progress — the  best  currency.  And  I  expect  to  live  to 
see  the  time  when  silver  and  gold  will  be  considered,  ])y  all  stu- 
dents of  political  economy,  as  unfit  for  money — as  simply  a 
commodity  of  considerable  intrinsic  value ;  and  the  cheapest 


KIXD   AND   AMOUNT   OF    CURRENCY.  179 

of  all  materials — paper — solely  used  to  bear  the  stamp  of  pow- 
er or  govermnental  authority,  which  alone  makes  money. 
Then  each  Government  ^vill  have  its  one  distinctive  currency, 
that  cannot  be  impaired  or  depreciated  by  the  financial  or  com- 
mercial success  of  any  other  country. 

T  here  quote  from  the  report  of  the  Silver  Commission : 

"Describing  our  situation  summarily,  it  may  be  said  that 
our  commercial  intercourse  with  Western  Europe  consists  of 
two  parts : 

First,  the  export  of  articles  indispensable  to  Europe,  such 
as  cotton,  the  cereals,  tobacco,  and  the  products  of  animals,  a 
trade  which  needs  no  stimulation  or  favor  of  any  kind. 

Second,  the  import  from  Europe  of  manufactures.  This 
is  a  trade  which  all  parties  and  the  representatives  of  all  shades 
of  economical  opinion  in  this  country  wish  to  see  steadily  di- 
minished and  eventually  terminated.  The  reasons  \tiiich  con- 
duce to  this  uniformity  of  desire  are  very  diverse,  as  also  are 
the  modes  proposed  to  accomplish  the  object  sought.  Some 
propose  protective  tariffs  and  high  duties  as  the  l)est  means. 
Others  maintain  that  the  better  if  not  the  only  way  to  keep 
out  European  manufactures  is  by  the  production  in  this_  coun- 
try of  superior  articles  at  lower  prices,  and  that  this  is  only 
possible  \^-ith  free  trade  or  simply  a  revenue  tariff  and  cheap 
raw  material.  But,  by  whatever  way  it  m.ay  be  reached,  a  dim- 
inution, tending  always  to  an  extinction  of  imports  from  Eu- 
rope, is  universally  desired  in  this  country. 

It  is  in  trade  with  other  parts  of  the  world,  in  less  ad- 
vanced stages  of  civilization,  or  with  essentially  different  sys- 
tems of  civilization,  or  with  essentially  different  raw  products 
resulting  from  marked  diversity  of  climates,  that  we  find  the 
natural  outlets  for  our  manufactures,  and  in  many  cases  the  op- 
portunity for  a  mutually  advantageous  exchange  of  native  pro- 
ductions. It  is  not  perceived  that  that  trade  can  become  too 
large.  All  interests  and  opinions  favor  its  expansion,  and,  un- 
like the  trade  M'ith  Western  Europe,  its  existence  and  extent 
depend  upon  the  wisdom  and  vigor  of  our  efforts  to  secure  and 
increase  it.  Our  trade  with  England  would  be  but  little  affect- 
ed if  we  should  l^e  entirely  passive  in  relation  to  it.  With 
China,  on  the  other  hand,  we  have  no  trade  which  we  do  not 
actively  seek.  Commercial  nations  will  seek  after  our  trade. 
We  nmst  ourselves  seek  after  trade  with  the  non-commer- 
■cial  nations. 


180  PHILOSOPHY    OF    PFJCE. 

It  is  by  no  means  clear  that  trade  between  nations  is  either 
increased  or  facilitated  by  a  concurrence  in  their  standards  of 
money.  But  even  if  it  wei-e  so,  the  double  standard  would 
meet  all  requirements  better  than  the  single  standard.  It  would 
tend  to  keep  constantly  available  a  sufficient  stock  of  both  met- 
als for  the  trade  of  either  gold  or  silver  standard  countries. 

However  it  may  be  in  respect  to  trade  with  non-commer- 
cial countries,  it  has  never  been  shown  that  diversities  of  mon- 
ey, however  arising,  whether  from  single  standards  of  a  differ- 
ent metal,  or  from  systems  of  irredeemable  paper  currency,  are 
any  hindrance  to  trade  between  commercial  countries.  What- 
ever the  moneys  of  such  countries  may  be,  they  are  always  in- 
terconvertible at  knoAvn  and  not  widely-variant  rates.  There 
is  no  property  on  sale  in  London  for  which  the  holder  would 
refuse  payment  in  silver  or  in  greenbacks  at  the  current  rates 
of  exchange ;  and  there  is  no  property  on  sale  in  New  York 
for  which  the  holder  would  refuse  payment  in  Bank  of  Eng- 
land notes  at  the  current  rates  of  exchange.  Greenbacks  are 
not  a  legal  tender  in  London.  Silver  is  not  a  tender  there. 
Neither  are  American  gold  eagles,  and  both  greenbacks  and 
silver  are  as  readily  convertible  into  sterling  money  as  gold 
eagles  are.  The  irredeemable  paper  currency  existing  in  this 
country  since  1862  has  not  obstructed  its  European  trade  in 
any  degree  whatever.  The  trade  of  England  with  commercial 
countries  was  not  obstructed  when  it  had  an  inconvertible  pa- 
per currency  from  1797  to  1821.  The  ]>aper  moneys  of  Rus- 
sia, Austria,  Italy,  France  and  Brazil,  altliough  differing  great- 
ly in  their  value  relatively  to  gold  and  silver,  are  no  liin- 
drances  to  their  trade  w4th  each  other,  with  the  United  States, 
or  with  European  countries  having  metallic  standards.  Various 
nations  in  Europe,  in  close  proximity  to  each  other,  or  having 
large  intercourse  with  each  otlier,  have  had  different  single 
metallic  standards,  without  experiencing  any  inconvenience 
from  that  circumstance.  The  single  silver  standard  existed  in 
Holland  from  1847  to  1875,  and  in  Germany  from  1857  to 
1871,  but  the  large  trade  of  both  with  England,  having  a  sin- 
gle gold  standard,  was  carried  on  during  those  periods  with 
undiminished  facility. 

Tlie  long  and  still  continuing  difference  of  currency  be- 
tween England  and  its  greatest  dependency,  India,  is  a  striking 
illustration  of  the  fact  that  trade  between  distinct  peoi)les  is 
not  obstructed  by  the  difference  in  their  money  standards. 
Both  are  parts  of  one- empire,  and  the  coinages  of  both  are  im- 
pressed with  the  head  of  the  same  ruler,  but  the  British  sover- 


KIND  AND  AMOUNT  OF  CURRENCY.  181 

eiffn  is  not  a  good  tender  for  a  debt  in  Calcutta,  nor  is  the 
Indian  rupee  a  good  tender  for  a  debt  in  London.  Cases  are 
said  to  have  occurred  of  such  extreme  financial  pressure  in 
both  those  cities  that  loans  of  money,  that  is  to  say,  silver,  have 
l)een  refused  at  Calcutta  on  a  pledge  of  sovereigns,  aiid  that 
loans  of  money,  that  is  to  say,  gold,  have  been  refused  in  Lon- 
don on  a  pledge  of  rupees.  No  difficulty  has  ever  arisen  in 
the  immense  trade  between  Great  Britain  and  India  from  this 
difference  of  currencies,  although  this  i*  doubtless  due  in  part 
to  the  exceptional  circumstances  which  have  given  to  England 
a  large  and  constant  supply  of  silver,  notwithstanding  that  its 
standard  money  is  gold. 

A  fact,  less  striking  in  some  aspects,  but  more  go  in  oth- 
ers, is  the  diifei'ence  in  the  actual  currencies  of  the  Atlantic 
and  Pacific  States  of  this  Union.  The  difference  is  not  made 
by  law,  but  is  a  matter  of  choice  on  the  part  of  the  people  of 
the  Pacific  slope.  They  judge  that  it  has  advantages  for  them, 
and  both  they  and  the  people  on  the  Atlantic  perceive  that  it 
is  not  in  the  least  degree  obstructive  to  their  mutual  inter- 
course. There  is  no  more  difficulty  in  translating  the  green- 
back prices  of  New  York  into  the  gold  prices  of  San  Francis- 
co, than  there  is  in  translating  pounds  avordupois  into  French 
kilograms. 

A  distinguished  writer,  J.  E.  Cairnes,  professor  in  the 
L^niversity  College  of  London,  in  a  recent  work  (1874)  on  Po- 
litical Economy,  says : 

'  It  appears  to  me  that  the  influence  attributed  by  many 
able  writers  in  the  United  States  to  the  depreciation  of  the  pa- 
per currency,  as  regards  its  effects  on  the  foreign  trade  of  the 
country,  is,  in  a  great  degree,  purely  imaginary.  An  advance 
in  the  scale  of  prices,  measured  in  gold,  in  a  country,  if  not 
shared  by  other  countries,  will  at  once  aifect  its  foreign  trade, 
giving  an  impulse  to  imiportations,  and  checking  the  exporta- 
tion of  all  commodities  other  than  gold.  A  similar  effect  is 
very  generally  attributed  by  American  writers  to  the  action  on 
prices  of  the  greenback  inconvertible  currency.  But  it  may 
easily  be  shown  that  this  is  a  complete  illusion.  Foreigners  do 
not  send  their  products  to  the  Ignited  States  to  take  back 
greenbacks  in  exchange.  The  return  which  they  look  for  is 
cither  gold  or  the  commodities  of  the  country ;  and  if  these 
have  risen  in  price  in  proportion  as  the  paper  money  has  been 
depreciated,  how  should  the  advance  in  paper  prices  constitute 
an  inducement  for  them  to  send  their  goods  thither  I  The  noui- 
ical  gain  in  greenbacks  on  the  importation  is  exactly  balanced 


182  PHILOSOPHY    or    PEICE. 

by  the  nominal  loss  when  those  greenbacks  come  to  be  convert- 
ed into  gold  or  commodities.  The  gain  may,  in  particular 
cases,  exceed  the  loss,  but,  if  it  does,  the  loss  will  also,  in  other 
cases,  exceed  the  gain.  On  the  whole,  and  on  an  average,  they 
cannot  but  be  the  equivalents  of  each  other.' " 

The  nations  of  Europe  are  not  prepared  to  decide  whether 
gold  or  silver  is  preferable  for  money.  Centuries  of  study 
and  experience  does  not  appear  to  solve  the  question.  The 
general  money  system  of  Europe  had  been  that  of  the  double 
standard  until  18 73-.  The  conspicuous  exceptions  were  Hol- 
land, which  had  been  during  much  thejarger  part  of  its  histo- 
ry a  single  silver  standard  country,  and  England,  which  had 
adopted  the  single  gold  standard,  in  1816  by  law,  and  in  1821 
in  fact.  In  consequence  of  the  apprehensions  of  a  fall  in  the 
value  of  money,  or,  what  amounts  to  the  same  thing,  a  rise  in 
wages  and  the  value  of  property,  excited  by  the  Californian 
and  Australian  yield  of  gold,  Belgium  adopted  a  single  silver 
standard  in  1850,  and  the  German  States  in  1857.  Belgium, 
however,  returned  to  the  double  standard  in  1861. 

Germany  and  the  United  States  demonetized  silver  in 
1873.  At  that  time  it  was  neither  depreciated  nor  unsteady  in 
value,  nor  had  any  change  occurred  in  the  relative  production, 
consumption  or  distribution  of  the  precious  metals  to  indicate 
its  depreciation  in  the  future,  nor  was  any  actual  or  probaljle 
depreciation  assigned  as  a  reason  for  its  demonetization.  The 
average  flow  of  silver  to  India  was  undisturbed,  and  the  big 
Bonanza  in  the  Comstock  lode  was  undiscovered.  Manifestly, 
the  real  reason  for  the  demonetization  of  silver  was  the  appre- 
hension of  the  creditor  classes  that  the  combined  production  of 
the  two  metals  would  raise  prices  and  cheapen  money,  unless 
one  of  them  was  shorn  of  the  money  function.  In  Europe, 
this  reason  was  distinctly  avowed.  This  is  no  doubt  the  true 
reason  for  all  this  outcry  against  silver.  The  war  against  it  is 
not  made  to  destroy  its  commercial  value,  but  to  destroy  its  use 
as  money,  and  thereby  to  lessen  the  volume  of  circulating  me- 


KIND  ANb  AMOUNT  OF  CURRENCY.  183 

diiim.  Evidence  like  tliis  ought  to  be  sufficient  to  condemn 
both  metals  as  a  basis  for  currency. 

A  transition  in  this  country  from  paper  to  coin  involves  a 
struggle  for  the  needed  coin  with  other  countries,  no  one  of 
which  has  any  that  is  not  urgently  needed  for  its  own  payments 
and  necessities.  The  United  States  will  be  at  the  disadvantao-e 
of  struggling  for  the  coin,  of  which  other  countries  are  in  pos- 
session. It  can  be  successful  only  by  a  reduction  of  prices  in 
this  country,  not  merely  to  the  present  level  of  coin-prices 
throughout  the  world,  but  to  that  lower  level  to  which  they 
must  descend  under  such  a  new  and  ffreat  demand  for  coin  as 
the  resumption  of  specie  payment  in  this  country  has  occa- 
sioned. This  crash  in  prices  cannot  be  avoided  by  confining 
our  demand  for  the  metals  to  the  products  of  our  own  mines. 
That  product  is  a  part  of  the  current  supply  of  the  world,  and 
to  subtract  from  fhat  supply  is  the  same  thing  in  its  practical 
effect  as  subtracting  from  the  stocks  of  the  world,  because  the 
entire  current  supply  is  not  more  than  sufficient  to  keep  the 
existing  stocks  unimpaired.  It  cannot  be  avoided  by  borrow- 
ing coin  abroad  upon  our  bonds.  No  such  borrowing  will  be 
permitted  to  reach  the  gold  of  the  great  European  banks,  and 
must  be  confined  to  the  small  quantities  floating  in  commercial 
liands.  But  the  decisive  consideration  is,  that  even  if  gold 
should  be  obtained  in  that  way,  it  could  be  kept  here  upon  no 
other  condition  than  a  reduction  of  our  prices  to  or  below  the 
coin  prices  of  tlie  world. 

My  objections  to  a  metallic  basis  for  a  circulating  medium 
are: 

1st.  All  currencies  based  on  metallic  values  must  vary 
more  or  less  as  the  supply  of  these  metals  increase  or  diminish. 

2nd.  No  two  metals  can  bear  the  same  ratio  of  value  to 
each  other  for  any  considerable  length  of  time,  owing  to  the 
above  reasons. 

3d.     When  one  metal  is  made  the  standard  or  unit  of 


184:  PHILOSOPHY  OF    PRICE. 

value,  all  other  metals  are  forced  to  become  subsidiary. 

4th.  When  one  metal  is  named  as  the  sole  measure  of 
value,  it  immediately  contracts  the  circulating  medium  of  the 
country  to  the  amount  of  that  one  metal,  because  all  other  cur- 
rency is  measured  by  the  existing  standard.  This  increases  the 
value  of  the  ond  metal  at  the  expense  of  all  other  kinds  of  cur- 
rency. It  makes  this  one  metal  the  arbiter  of  all  values,  there- 
by giving  it  a  power  never  intended  in  the  economy  of  the 
exchanges  of  the  world. 

5th.  It  makes  the  volume  of  circulating  medium  entirely 
dependent  upon  the  success  or  failure  attending  the  discovery 
and  operation  of  gold  mines.  "With  an  increase  of  gold  min- 
ing our  circulation  would  expand  ;  with  a  decrease  in  tjiat  en- 
terprise, our  circulation  would  contract.  This  would  place  all 
commercial  values,  both  of  products  and  labor,  in  a  vacillating 
condition,  rising  or  falling  in  proportion  to  the  success  or  fail- 
ure of  this  one  branch  of  business. 

6th.  The  effect  is  bad  enough  when  the  condition  of 
prices  rests  upon  the  success  or  failure  of  the  two  enterprises — 
the  mining  of  gold  and  silver — together,  but  when  reduced  to 
the  single  venture  resulting  from  a  gold  standard,  the  effect  is 
reduced  to  a  degree  of  uncertainty  that  is  generally  disastrous 
to  business. 

7th.  Our  business  prosperity  should  be  placed  beyond 
any  such  contingency,  because  a  failure  in  the  business  of  min- 
ing the  precious  metals  would  react  on  all  other  branches  of 
industry,  and  make  their  success  depend  entirely  upon  the 
good  or  bad  luck  of  mining  ventures.  All  our  industries  out- 
side of  mining  are  based  upon  close  calculation,  while  the  suc- 
cess of  mining  is  simply  and  only  the  result  of  chance. 

Sth.  The  value  of  both  gold  and  silver  frequently  change, 
and  for  this  reason  it  is  difficult  to  determine  whether  other 
commodities  have  depreciated,  or  gold  and  silver  appreciated 
in  value. 


KIND  AND  AMOUNT  OF  CURRENCY.  185 

9th,  Gold  and  silver  being  simply  commodities,  it  is  nei- 
ther logical  nor  philosophic  to  say  that  one  commodity  shall 
measure  the  value  of  another. 

10th.  The  only  currency  that  will  perform  the  functions 
of  an  equitaljle  exchange  and  measure  of  values  is  the  incon- 
vertible paper  dollar  or  unit,  in  itself  incapable  of  increasing 
or  diminishing  intrinsically,  and  based  on  the  wealth  and  abili- 
ty of  the  whole  people,  and  the  power  of  the  general  govern- 
ment to  levy  taxes,  thereby  making  it  for  the  interest  of  every 
citizen  of  the  Republic  to  supjiort  and  maintain  our  national 
integrity. 

11th.  There  is  no  such  thing  as  a  recognized  money  of 
tlie  world.  Outside  of  each  nation  all  money  is  sold  for  its 
commodity  value  in  pounds,  ounces,  etc.  The  oft-quoted  idea 
has  no  foundation  in  fact,  and  only  obtains  through  the  igno- 
rance of  the  people  on  financial  questions. 

12th.  A  nation  with  the  diversified  interests  that  ours 
possesses  should  have  a  currency  of  its  own,  a  currency  that  if 
used  and  passed  outside  of  our  borders,  beyond  our  national 
lines,  would  be  without  our  consent ;  and  that  for  every  dollar 
so  used  by  foreign  nations  we  should  be  that  much  the  richer 
instead  of  becoming  poorer,  as  now,  by  a  constant  drainage 
from  our  circulation  of  the  precious  metals. 

"  Government  paper  money  has  always  enriched  a  nation 
vdien  properly  issued,  restricted,  and  secured.  It  has  ever 
been  a  siiccess.  Specie,  for  a  domestic  currency,  or  as  a  basis 
for  paper,  has  l)een  a  failure  M'ithout  a  solitary  exception. 

Napoleon,  at  St.  Helena,  claimed  that  England  Ijeat  him 
with  her  spindles,  but  it  M-as  her  paper  money  that  kept  the 
spindles  in  motion.  Specie  in  its  stead  would  have  given  hiuj 
the  victory. 

England's  entire  disregard  of  specie  and  copious  issue  of 
paper  money  after  the  suspension  of  specie  ])ayments  in  1797 
till  1819  were  the  most  prosperous  days  that  England  ever  saw. 

This  wise  policy,  to  which  she  was  driven  by  necessity,  to- 
gether witli  the  bills  of  credit  issued  by  the  United  allied  pow- 
ers, and  which  were  not  only  as  good,  but  superior  to  gold, 


KIND   AND   AMOUNT   OF   CUEEENCY.  186 

from  '  Kainschatka  to  the  Ehine,'  turned  the  tide  of  war  against 
Napoleon,  and  won  the  decisive  battle  of  Waterloo,  saving 
England  from  becoming  a  province  of  France." 

In  order  to  discuss  the  question  of  a  supply  of  currency 
understandingly,  we  should  tirst  examine  the  sources  from 
which  this  supply  is  obtained,  which  are  as  follows : 

1st.     The  coinage  of  gold,  which  is  free  and  unlimited. 

2nd.  The  coinage  of  silver,  which  is  not  free,  and  is  lim- 
ited to  two  millions  per  month. 

3rd.  The  issuing  of  legal  tenders  by  the  Government, 
which  is  limited  to  about  347  millions  in  amount. 

4th.  The  issuing  of  bank  notes,  which  is  unlimited  in 
amount,  but  is  not  made  compulsory. 

Through  these  four  channels  must  come  all  the  circulating 
medium  of  the  nation.  A  glance  at  the  above  statements  will 
show  how  completely  the  supply  of  currency  is  in  the  hands 
of  moneyed  men,  and  how  strongly  they  are  entrenched  be- 
hind the  law. 

The  coinage  of  gold  is  absolutely  without  expense ;  that 
is,  any  one  who  has  gold  can  have  it  coined  into  money  free  of 
charge.  This  gives  to  that  metal  a  premium  over  silver,  and 
creates  at  the  outset  a  discrimination  against  it. 

The  coinage  of  silver  is  limited  to  a  certain  amount  eaeli 
month,  and  the  Government  reserves  the  right  to  purchase  it, 
whe-rever  it  can  be  bought  the  cheapest.  This  makes,  competi- 
tion among  the  silver  producers,  which  also  tends  to  discredit 
that  metal,  for  no  matter  how  much  may  be  mined,  ready  for 
coinage,  this  arbitrary  act  of  Congress  limits  the  amount  to  two 
millions  each  month — all  of  which  creates  a  feeling  of  distrust 
that  is  not  favorable  to  silver,  and  is  beneficial  to  gold. 

The  issuing  of  more  greenbacks  is  forbidden  by  law; 
hence,  a  further  supply  from  that  source  is  impossible. 

The  only  recourse  seems  to  be  Avith  the  national  bank 
issile.     Tins,  at  first  glance,  seems  to  be  sufficient  and  reasona- 


KIND  AND  AMOUNT  OF  CUKRENCY.  187 

ble,  but  to  examine  it  closely  dissipates  all  such  hopes.  There 
is  nothing,  absolutely  nothing,  that  compels  a  bank  to  take  out  • 
any  currency.  Many  banks  do  not.  The  only  inducement  for 
them  in  that  direction  is  the  question  of  proiit.  If  it  will  pay 
to  issue  their  bills,  the  banks  issue  them ;  if  it  will  not  pay, 
they  not  only  refuse  to  issue  any,  but  retire  what  they  have 
issued.  So  the  amount  of  national  bank  currency  does  not  de- 
pend on  the  wants  or  demands  of  the  people,  but  the  profit 
accruing  to  the  banker;  the  people  in  the  mean  time  pay 
to  the  banks  this  profit.  In  proof  of  this,  we  have  2,714: 
banks,  with  a  combined  capital  of  $527,524,410 ;  these  banks 
are  entitled  to  90  per  cent,  of  this  amount  in  currency,  which 
would  be  $474,771,969.  Instead  of  that  amount,  there  is  but. 
$268,869,597  of  national  bank  bills  in  circulation,  a  difference 
of  $205,902,372.  If  it  should  appear  to  their  advantage,  the 
whole  might  be  retired,  and  the  circulating  medium  reduced  to 
the  extent  of  their  whole  issue.  Such  an  act  on  their  part 
would  certainly  bankrupt  the  nation.  This  is  a  power  for  evil 
that  is  delegated  to  no  other  corporations  on  the  face  of  the 
earth.  It  absolutely  dictates  the  values  of  everything  in  our 
country,  fixes  the  price  not  only  of  labor,  but  all  the  produc- 
tions and  accumulations  of  labor.  The  fact  that  gold  is  not 
mined  in  suflicient  quantities  to  satisfy  the  demand  even  for 
the  manufacture  of  ornameniB,  and  that  the  stock  of  coin  and 
bullion  has  been  encroached  upon,  is  not  very  encouraging  for 
a  greater  supply  from  that  source.  Men  well  posted  in  the 
supply  of  that  metal  declare  that  within  the  next  decade  the 
present  stock  of  gold  coin  will  be  lessened  by  a  large  per  cent, 
for  purposes  outside  of  money  use.  The  world  has  been  ex- 
plored to  its  uttermost  parts  for  this  metal,  and  the  time  seems 
near  at  hand  when  that  industry  will  prove  to  be  unremunerar 
tive  at  its  present  value.  Even  now  its  value  is  enhancing  with 
every  year.  The  supply  for  the  purpose  of  money  will  grow 
less  as  the  demand  for  it  for  other  purposes  increases,  because 


188  PHILOSOPHY    OF    PKICE. 

money  is  gold  in  its  cheapest  form.  People  will  pay  more  for 
it  to  use  as  ornaments  than  can  be  paid  for  it  to  use  as  money. 
It  ie  its  value  as  a  commodity,  and  not  as  money,  that  is  con- 
sidered. Gold  is  now  rapidly  appreciating  in  value,  and  the 
time  ^vill  soon  come  when  for  that  reason  alone  it  can  not  be 
utilized  in  that  capacity.  AVhen  that  time  comes,  silver  will  go 
through  with  the  same  course,  being  the  next  most  precious 
metal,  and  without  doubt  the  appreciation  in  value  will  force 
it  from  the  metals  out  of  which  money  is  made.  Enough  good 
reasons  have  presented  themselves  to  me  to  justify  the  idea 
that  sooner  or  later  the  supply  of  currency  must  come  from 
the  Government  direct.  That  we  must  have  free,  unlimited 
coinage  of  gold  and  silver,  and  a  certain  amount  of  Govern- 
ment issues  per  capita  of  the  people,  with  an  increase  as  the 
nation  becomes  more  populous. 

The  late  decision  of  the  Supreme  Court  has  shown  us  that 
the  Government  can  issue  legal  tender  paper  money  at  such 
times  and  in  such  quantities  as  Congress  may  determine.  Why 
should  the  Government  not  put  that  prerogative  in  force? 
Why  should  the  people  be  compelled  to  pay  for  its  being  done 
by  heartless  corporations?  In  a  debate  in  Congress  upon  this 
question  a  member  said : 

*"  On  the  other  hand,  take  away  the  profits  on  issuing  cur- 
rency, and  the  Ijanks  will  take  away  the  currency  itself.  This 
is  the  condition  of  things  now.  It  comes  to  this  theii :  If  you 
make  it  their  interest  to  do  so,  the  Ixmks  will  put  out  an  abund- 
ance of  currency,  even  to  the  wildest  inflation ;  but  if  it  is  not 
made  their  interest  to  do  it,  they  will  not  put  out  any." 

Under  the  present  banking  laws,  the  banks  of  this  country 
could  inflate  the  currency  to  the  extent  of  one  or  more  billions 
of  dollars  in  less  than  six  months'  time,  and  in  the  same  time 
contract  it  by  that  amount.  This  is  a  power  granted  to  a  mon- 
opoly by  our  laws.  This  power  is  not  only  dangerous  to  the 
nation,  but  disastrous  to  the  common  welfare  of  the  people. 
What  we  need  is  a  steady  volume  of  currency,  increasing  with 


KIXD    AXD    AMOITN'T   OF   CURKENCY.  189 

onr  population,  and  the  growing  demands  of  business.  This 
cannot  be  brought  about  through  delegated  power.  Such  pow- 
er is  almost  always  used  in  the  furtherance  of  selfish  purposes. 
Class  legislation  will  prove  ruinous  to  any  nation.  There 
should  be,  and  might  be,  a  happy  medium  between  the  debtor 
and  creditor  classes,  the  buyer  and  seller,  the  producer  and  con- 
sumer, in  which  the  rights  of  each  should  be  impartially  con- 
sidered. 

After  careful  examination,  I  am  led  to  believe  that  we 
should  have  at  least  fifty  dollars  per  capita  of  currency  in  the 
United  States.  Our  industries  are  so  diversified  and  the  extent 
and  area  of  our  land  so  great  that  we  require  more  circulating 
medium  to  do  the  same  amount  of  business  than  other  nations 
whose  populations  are  more  condensed.  This  amount  should 
be  increased  in  volume  in  jDroportion  as  the  country  inci-eases 
in  population  and  business.  With  a  currency  of  this  volume, 
issued  as  before  stated,  universal  prosperity  would  prevail 
throughout  our  land. 

"We  might  with  profit  ascertain  as  nearly  as  possible  what 
amount  of  work  a  dollar  is  required  to  do  during  one  year  of 
business.  But  few,  I  venture  to  say,  can  even  approximate 
the  truth  in  this  respect. 

First,  we  \vi\\  take  up  the  actual  debts  of  the  country  from 

our  best  authorities — known  and  estimated  as  follows : 

Our  National  Debt  proper  is §2,149,725,277.02 

Bonds  to  Railway  Companies 64, 623. 512.00 

Interest  on  Bonds.' ■ 18,627.74:3.43 

Unsettled  liabilities  (estimated) 250,000,000.00 

State  and  Municipal 1,000,000^000.00 

Loans,  etc.,  by  National  Banks 944,233.304.22 

Loans,  etc.,  by  State  Banks,  etc 514,081,496.90 

Loans,  etc.,  by  same  in  twenty-elaht  States,  etc.  (estimated)  1,500,000,000.00 

Individuals  to  each  other,  etc.,  (estimated) 2.000,000,000.00 

Funded,  etc.,  of  Railroads 1,511,578,944.00 

Making  the  fearful  total  \>f §9,952,870.266.67 

This  aggregate  is  almost  incomprehensible. 

Add  to  this  the  returns  from  the  clearino-'houses  for  one 


190  PHILOSOPHY  OF   PRICE. 

year.  A  comparison  of  the  business  of  ail  tlie  clearing-houses 
of  the  United  States  is  afiorded  by  the  following  table,  com- 
piled from  the  figures  furnished  for  the  year  ending  Decem- 
ber 31,  1884,  and  representing  the  clearings  of  each  insti- 
tution : 

New  York §30,985,871,170 

Boston 3,243,327,658 

Philadelphia 2.514,028,803 

Chicago 2,259,680.392 

St.  Louis 785,202,177 

Baltimore *. 631,687,135 

San  Francisco 556,857,691 

Pittsburg 469,316,010 

Cincinnati 460,600,000 

New  Orleans 454,500,000 

Providence 217,448,300 

Louisville 211,700,000 

Milwaukee 1 78.995,637 

Kansas  City 177,175,467 

Detroit 133,611,910 

Minneapolis 110,556,620 

Cleveland 106,044,770 

Hartford 81,834,837 

Indianapolis 73,213,168 

Memphis 60,040,361 

New  Haven 57,799,870 

Portland 45,421,102 

Peoria 44,058,884 

Worcester 39,610,041 

Springfield. * 37,585,774 

Columbus 34,858,428 

St.  Joseph 34,657,818 

Norfolk 34,158,781 

Syracuse 27,266,247 

Lowell 24.460,396 

Total $44,091,569,447 

To  this  enormous  amount  we  will  also  add : 

Agricultural  Products $  3,600.000,000 

Manufactured      "         6,000.000,000 

Mining 1,500.000,000 

Imports 650,000,000 

Taxation 300,000.000 

Freights 1,000.000,000 

Labor 3,000,000,000 

Total $16,050,000,000 

But  this  is  only  a  commencement.  If  the  clearing-house 
returns  alone  show  44  billions,  how  much  would  all  the  busi- 
ness of  the  nation  out.side  of  what  I  have  mentioned,  asrere- 


KIND   AND   AMOUNT   OF   CURRENCY,  191 

gate  ?   I  have  placed  it  at  one  hundred  times  as  mucli.     Let  us 
recapitulate : 

1st,  Debts $       9,952,000,000 

2ncl,  Clearing-house  Returns 44,091,000,0(X) 

3rd,  Products,  etc 16.050.000,000 

4tli.  All  other  transactions. 0,900,000,000,000 

Total $6,970,093,000,000 

The  above  sum  is  beyond  human  conception.  With  tlie 
present  amount  of  currency  among  the  people,  say  500  million 
dollars,  each  dollar  would  have  to  change  hands  at  least  46 
times  per  day,  or  nearly  five  times  during  each  business  hour. 

Bankers  will  say,  and  truly,  too,  that  94  per  cent,  of  all 
business  is  done  with  checks,  drafts,  etc.  In  view  of  this  fact, 
which  is  more  important  than  all  others,  we,  as  a  people,  should 
have  an  increase  of  currency  sufficient  to  reduce  this  per  cent. 
of  business,  which  has  really  been  transacted  on  inflated  credits, 
to  a  point  as  near  to  a  cash  basis  as  human  wisdom  can  deter- 
mine. For  the  reason  that  the  great  volume  of  all  the  busi- 
ness of  the  country  has  long  been  done  through  a  system  of 
inflated  credits,  we  notice  with  alarm  that  the  wealth  of  the 
many  is  rapidly  concentrating  in  the  hands  of  the  few.  This 
kind  of  currency  was  invented  for  the  rich — those  who  are 
able  to  have  bank  accounts ;  and,  bear  in  mind  that  99  per  cent 
of  our  people  never  had  a  bank  account.  None  but  the  wealthy 
can  use  these  substitutes  for  a  circulating  medium.  Of  all 
the  inventions  that  man  has  devised  to  add  riches  to  the  rich  at 
the  expense  of  the  poor ;  of  concentrating  business  in  large 
monopolies  and  soulless  corporations,  thereby  driving  out  all 
the  smaller  industries ;  of  making  one  portion  of  our  people 
masters  and  the  others  slaves — I  believe  this  system  of  check, 
draft  and  exchange  paper  inflation  is  the  most  ingenuous  and 
destructive  substitute  for  money  ever  known. 

It  is  not  maintained  that  a  compensation  can  be  made  for 
a  shrinkage  in  the  volume  of  money  by  an  increase  of  such 
banking  expedients  as  checks,  bills  of  exchange,  and  clearing- 


192  PHILOSOPHY    OF    PP.ICE. 

houses.  These  expedients  are  now  resorted  to,  and  because 
profit  is  found  in  their  use,  always  will  he  availed  of  to  the  ut- 
most possible  extent.  It  is  manifest,  therefore,  that,  whatever 
the  proportion  or  per  centage  they  bear  to  the  volume  of  mon- 
ey, it  cannot  be  increased  except  through  an  increase  in  that 
volume.  And  it  is  as  manifest  that,  when  the  volume  of  money 
is  diminished,  these  expedients  must  diminish,  and  prices  must 
fall  in  a  corresponding  ratio.  Money  is  the  prime  and  govern- 
ing force,  whose  functions  cannot  be  superseded  by  any  device 
whatever,  and  whose  volume  or  existence  does  not  depend  on 
banking  expedients,  while  these  expedients  grow  out  of  money 
and  could  not  exist  without  it.  The  farthest  extent  to  v»diich 
they  can  be  used  is  already  practically  reached,  and  they  can 
only  increase,  and  must  decrease,  as  the  volume  of  money  in- 
creases or  diminishes.  This  reasoning  partially  applies  as  to 
the  effect  of  credit  on  prices. 

It  would  seem  to  be  reversino;  the  natural  order  of  things 
to  maintain  that  prices  are  controlled  by  the  volume  of  credit, 
instead  of  by  the  volume  of  money.  Without  entering  into 
an  elaborate  discussion  of  this  intricate  question,  it  may  be  said 
that  prices  were  affixed  to  property  at  the  time  when  the  in- 
vention of  money  superseded  barter.  Fluctuations  of  prices 
frequently  arise  from  special  causes,  but  they  are  local  and 
temporary  in  their  character. 

Even  were  it  possible  to  devise  a  money  system  so  perfect 
that  steadiness  in  the  general  level  of  prices  would  be  absolute- 
ly assured,  there  would  still  occur  occasional  fluctuations  in  the 
prices  of  particular  commodities,  arising  from  a  temporary 
glut  or  scarcity  of  such  commodities  in  the  general  markets, 
caused  by  exceptionally  favorable  or  unfavorable  conditions, 
which  might  suddenly  enlarge  or  diminish  their  production,  or 
vary  the  demand  for  them.  Such  fluctuations  cannot  be  avoid- 
ed. They  mark  the  ebb  and  flow  of  business,  and  no  more 
affect  the  general  level  of  prices  or  prosperity  than  the  ebb  and 


KIND    AND    A^IOUNT   OF    CURRENCY.  193 

flow  of  the  tides  affect  the  general  level  of  the  ocean.  The 
producers  of  and  dealers  in  each  article  should  be  better  able 
than  anybody  else  to  foresee  and  guard  against  them,  and  have 
no  reason  to  complain  of  them.  But  they  may  well  complain 
when  the  general  level  of  prices  is  disturbed  by  monetary  leg- 
islation which  they  could  not  foresee,  are  not  responsible  for, 
and  whose  injurious  effects  they  could  not,  by  any  degree  of 
prudence,  avoid. 

As  I  have  stated  before,  all  the  nations  of  the  world,  at 
the  present  time,  seem  to  be  striving  for  the  possession  of  gold, 
and  are  determined,  if  possible,  to  make  it  the  sole  standard  of 
payment.  The  only  means  1)y  which  it  can  be  obtained  is  by 
the  sale  and  exchange  of  the  products  of  labor.  The  nation 
tliat  will  part  with  its  products  the  cheapest  will  obtain  the 
gold  and  hold  it  until  some  other  nation  forces  the  price  of 
products  do%Mi  to  a  still  lower  point.  This  is  the  cause  of  such 
a  general  depression  in  business  all  over  the  world.  This  strife 
has  been  so  bitter  and  earnest  that  the  price  of  all  productions 
has  shrunk  below  the  range  of  any  profit,  and  even  below  the 
cost  of  production.  Consequently,  we  find  bankruptcies  and 
business  failures  throughout  the  civilized  globe.  No  matter  if 
all  adverse  balances  are  leveled  up  with  exchangeable  commod- 
ities, they  must  first  be  measured  by  the  prevailing  standard  of 
payments  of  the  eountr}'  to  whom  the  balance  is  paid.  "We 
now  find  England,  France,  Germany,  Holland,  the  Scandina- 
vian States,  and  the  United  States  all  struggling  for  gold, 
because  that  metal,  by  secret  governmental  interference,  has 
virtually  become  the  standard  of  payments.  We  might,  in 
certain  cases,  with  some  degree  of  safety,  attempt  to  establish  a 
gold  standard  by  law,  but  with  all  these  nations  attempting  to 
do  the  same  thing,  and  competing  with  us  for  the  gold  neces- 
sary to  keep  the  standard  good,  it  would  be  the  height  of  folly 
for  this  nation  to  adopt  it.  It  would  wreck  the  entire  indus- 
tries of  the  country. 


194  PHILOSOPHY    OF  PRICE. 

I  quote  from  a  London  paper : 

'•  Probably,  if  there  were  gold  enough  for  all  the  world,  it 
would  be  best  that  there  should  be  only  a  single  standard  of 
value  throughout  the  world,  and  that  one — gold.  But  this  is 
impossible.  Some  have  doubted  whether  there  is  gold  enough 
even  for  the  nations  which  now  intend  to  use  it ;  and  there  cer- 
tainly is  not  enough  for  all  the  world.'' — London  Economist. 

One  writer  claims  there  is  not  gold  and  silver  enough 
in  the  world  to  pay  the  interest  on  the  world's  indebted- 
ness. 

If  our  currency  could  be  expanded  sufficiently  to  enable 
at  least  a  majority  of  business  transactions  to  be  conducted  with 
money,  the  wealth  of  the  nation  would  seek  its  level,  and  each 
individual  would,  in  a  much  larger  degree,  reap  the  reward  of 
his  own  energies. 

All  of  the  truly  great  economists  and  scientists  of  the 
world  freely  admit  that  both  gold  and  silver  have  ever  been, 
and  from  the  nature  of  things,  must  ever  be  imperfect  money, 
and  an  unjust  standard  or  thermometer  of  prices.  And  they 
also  admit,  that  a  paper  money  issued  solely  by  the  Govern- 
ment, under  a  system  that  would  duly  and  properly  limit  its 
amount — would  be  the  most  perfect  economic  and  just  money 
of  which  the  present  knowledge  of  man  is  able  to  conceive. 
Those  who  deny  that  such  is  the  position  held  by  the  great 
economists  of  the  world,  and  also  the  truth  that  has  been  estab- 
lished by  some  thirty  centuries  of  mankind's  experience,  have 
failed  in  their  study  of  the  world's  history,  and  any  one  who 
is  inclined  to  doubt  these  statements  can  verify  them  by  re- 
course to  the  proper  eourse  of  reading. 

Those  economic  laws  which  may  be  jDerfectly  sound  and 
correct  under  certain  customs  and  conditions,  would,  if  carried 
into  effect  M'ith  us,  be  suicidal.  The  laws  of  many  nations  are 
made  for  dense  populations,  where  there  is  and  always  has 
been,  the  rigorous  rules  of  caste;  where  men  are  born  as  law- 
makers, instead  of  being  selected  by  the  people.    Tliere  is  hardly 


KIKD   AND   AMOUNT   OF    CUEKEKCY.  195' 

a  condition  in  onr  social  and  economic  life  where  tlie  same 
rule  of  action  would  applj  to  both. 

Then  why  should  we  not  be  nationally  independent  in 
that  greatest  of  all  factors  entering  into  our  individual  pros- 
perity and  happiness — the  currency  of  our  country? 

Instead  of  being  led  by  the  older  nations  of  Europe,  why 
do  we  not  turn  our  attention  to  the  vast  field  for  operations  at 
home,  and  lead  the  South  American  States  and  Mexico  up  to 
the  plane  of  civilization,  financially  and  socially,  that  we  occu- 
py ?  It  would  be  satisfactory,  remunerative  and  beneficent  to 
the  entire  people. 


196  PHILOSOPHY    OF    PRICE. 


CHAPTER  y. 

VALUE   AND    ITS    EELATIOX   TO    MONET. 

"  Money  is,  as  it  were,  the  substitute  for  legal  demands 
(for  payment)  and  hence  it  has  the  name  vouioua  (that  which 
is  estabhshed  by  law),  Ijecause  it  is  not  so  by  nature?  but  by 
law ;  and  because  it  is  in  our  power  to  change  it  and  render  it 
u  seless. " — Aristotle. 

In  the  minds  of  most  people  there  is  a  sort  of  sujDersti- 
tious  awe  about  money.  Why  it  is  money  and  how  did  it 
come  to  be  such,  are  queries  that  have  generally  been  vaguely 
answered.  The  word  is  invested  with  a  kind  of  glamour  that 
keeps  its  real  propei'ties  and  functions  from  being  investigated 
and  made  plain.  ]^o  person  ever  handled  a  dollar,  any  more 
than  he  ever  held  in  his  hand  a  days'  work.  A  dollar  is  an 
abstract  idea,  not  the  name  of  a  thing,  but  the  name  of  a  qual- 
ity of  a  thing.  Take  for  example  a  gold  dollar.  Its  super- 
scription denominates  it  a  dollar.  Place  it  beneath  the  blows 
of  a  hammer,  and  deface  the  inscription.  Now,  what  is  it;  a 
dollar?  Ko.  It  is  a  quantity  of  gold.  The  dollar  is  gone, 
Avithout  any  loss  of  metal.  No  one  saw  it  go  from  the  metal. 
Neither  can  it  be  found.  This  dollar  is  an  idea — a  mental  con- 
ception— and  has  no  relation  to  value  in  itself  whatever.  Nei- 
ther can  it  be  value  of  itself  in  any  sense. 

One  class  of  writers  state  their  case  as  follows :  The  dol- 
lar measures  values  the  same  as  the  yard-stick  measures  yards. 
The  dollar  is  made  of  a  certain  number  of  grains  of  gold  or 
silver.     The  yard-stick  is  composed  of  thirty-six  inches  linear 


VALUE   AND    ITS   KELATION   TO    MONEY.  197 

measurement.  From  this  thev  aro-iie  :  Is  it  riffht  that  the 
yard-stick  should  measure  thirty-three  inches  to-day,  and  thirty- 
eight  to-mori'ow  ?  Where  would  the  just  standard  of  measure- 
ment be  found  ?  If  it  is  not  right  to  change  the  yard-stick  it 
cannot  be  right  for  a  dollar  to  be  of  one  value  at  one  time,  and 
increase  or  diminish  in  value  at  another.  This  argument  ap- 
pears plausible  and  quite  unanswerable.     Let  us  examine  it. 

In  the  first  place,  it  is  not  true  that  the  dollar  measures 
value  as  the  yard-stick  measures  the  yard.  In  the  one  case 
both  are  considered  actual  substances,  while  in  the  other  both 
ai'e  mental  conceptions  or  ideas.  But  suppose  they  were  alike. 
In  order  to  measure  vards  it  is  necessarv  to  have  yard-sticks  : 
also  to  measure  value  we  must  have  the  dollar  or  unit  of  meas- 
m-ement.  It  would  follow,  therefore,  that  the  more  yards  to 
measure  the  more  yard-sticks  would  be  necessary.  Likewise, 
the  more  value  to  measurs,  the  more  dollars  would  be  needed. 
"We  will  not  stop  here.  If  the  yard-stick  should  be  made 
more  than  36  inches  in  length,  the  seller  would  lose  and  the 
buyer  gain,  because  the  measure  is  increased  and  the  number 
of  measurements  lessened.  If  the  value  of  the  dollar  is  in- 
creased, its  capacity  for  measurement  will  be  increased,  and  the 
number  of  measures  lessened.  Suppose  a  government  should 
set  its  people  to  manufacturing  cloth  by  offering  special  induce- 
ments, and  at  the  same  time  make  up  a  quantity  of  yard-sticks 
for  their  use.  At  first  there  might  be  yard-sticks  enough  and 
to  spare,  but  as  business  increased,  they  would  become  more 
and  more  in  demand,  until  the  time  came  when  there  M'ould 
not  be  enough  to  measure  the  cloth  as  fast  as  it  came  from  the 
looms.  Now,  suppose  these  yard-sticks  were  made  from  some 
rare  material,  difficult  to  find,  vrhose  very  possession  was  the 
result  of  chance,  and  the  making  and  furnishing  was  monopo- 
lized by  the  government.  Suppose  under  these  conditions  the 
people  clamored  for  more  measures,  saying  their  goods  were 
unmeasured,  and,  consequently,  for  a  lack  of  sufficient  mea&- 


198  PHILOSOPHY    OF    PRICE. 

ures  remains  unsold.  What  would  be  the  wise  course  for  that 
government  to  pursue  ?  "Would  it  break  Up  a  large  per  cent, 
of  the  measures  on  hand  and  in  constant  use  ?  Would  it  say  to 
its  people — go  out  among  the  swamps  and  through  the  timber, 
and  i^erhaps  you  may  find  some  of  the  material  out  of  which 
these  measures  are  made.  You  can  make  no  absolute  calcula- 
tion as  to  its  location,  but  must  depend  entirely  upon  chance  to 
obtain  it,  and  if  luck  should  be  in  your  favor,  bring  the  mate- 
rial to  me,  and  I  will  make  you  a  certain  number  of  measures 
each  month.  Would  this  be  the  wise  course  to  pursue  ?  Cer- 
tainly not.  The  government  should  ask  how  many  measures 
were  needed,  and  then  take  the  most  convenient  commodity, 
and  make  as  many  as  its  people  needed,  and  also  pro^dde  for 
future  wants.  How  does  this  illustration  apply  to  the  dollar  ? 
Congress  said,  when  the  people  were  using  three  measures  of 
value,  "You  have  too  many;  we  will  destroy  a  portion  of 
them,"  and  it  did.  It  claimed  the  measures  were  made  of  too 
many  kinds  of  material — paper,  silver  and  gold ;  therefore,  we 
will  hmit  their  composition  to  two  of  these — silver  and  gold. 
Again,  it  said,  "We  will  limit  the  measures  to  one  material,  and 
that  shall  ])e  eold  alone."  It  was  done.  No  matter  how  great 
the  need  of  the  people  for  these  measures,  no  matter  how 
mucli  they  clamored  for  them,  the  Government  said,  "  Go  to 
the  lulls  and  dig,  and  if  you  are  successful,  bring  the  results  to 
me,  and  I  will  make  the  measures  for  you  as  I  think  you  need." 
Would  it  not  be  better  for  the  Government  to  say  to  the  peo- 
ple, "  You  shall  have  all  the  measures  that  your  business  de- 
mands, and  for  fear  some  evil  disposed  persons  might  in  some 
manner  get  possession  of  too  large  a  portion  of  them,  and  levy 
a  contril)ntion  for  their  use,  I  will  furnish  an  abundant  supply." 
Notwithstanding  the  fact  that  time  and  human  progress 
has  changed  nearly  everything  else  in  our  economic  existence, 
we  find  ourselves  paying  out  to-day,  silver,  the  current  money 
of  the  mercJuints,  tlie  same  as  Abraham  did  more  than  4,000 


VALUE   AXD    ITS    RELATION    TO   MONEY.  109 

years  ago,  when  he  bought  the  cave  of  Machpelah.  We  are 
digging  for  the  same  material,  gold,  for  which  Solomon  so 
anxiously  struggled. 

The  most  ancient  idea  connected  with  tlie  temporal  i-ela- 
tions  of  man  is  that  of  gold  and  silver  as  money.  No  other 
idea,  among  the  millions  that  have  been  advanced,  relating  to 
the  social  and  business  conditions  of  the  human  family,  has 
withstood  the  changes  of  progressive  civilization  and  main- 
tained its  original  character  as  has  tliis  idea  of  money. 

In  those  days  of  nomadic  governments,  this  idea  became 
general  for  obvious  reasons.  It  continued  down  through  the 
history  of  weak  and  unstable  nations  preceding  the  lifteenth 
century,  and  began  to  be  relaxed  with  the  invention  of  bills  of 
exchange,  or  paper  money,  in  the  sixteenth  century.  As  bills 
of  exchange,  checks,  and  paper  money  have  increased  in  use, 
mankind  have,  without  understanding  its  import,  in  direct  ratio 
to  that  increase,  yielded  to  the  solid  fact  that  there  can  be  no 
intrinsic  value  in  money. 

During  the  reign  of  Augustus  Caesar,  the  gold  and  silver 
money  of  the  wdiole  world  amounted  to  less  than  the  present 
amount  of  gold  and  silver  in  the  United  States.  During  the 
Dark  Ages,  from  the  fourth  to  the  fifteenth  centuries,  the 
mines  having  failed,  this  amount  was  diminished  to  about  200 
millions.  The  gold  and  silver  mined  and  used,  following  the 
discovery  of  America,  combined  with  the  use  of  bank  paper, 
rekindled  the  glimmering  fires  of  civilization,  and  made  possi- 
ble the  grandeur  of  the  nineteenth  century,  "VVe  are  met  here 
with  representatives  or  substitutes  for  money. 

If  money  must  have  value  intrinsically — a  certain  amount 
of  either  gold  or  silver — then  there  is  no  method  known  by 
which  it  can  be  increased  in  amount,  only  by  an  increase  in  the 
quantity  of  the  metals.  If  they  are  represented  or  substituted, 
they  must  remain  at  their  maximum  to  redeem  their  represent- 
atives or  substitutes.     They  caimot  perform  both  functions  at 


200  PHILOSOPHY    OF    PEICE. 

once.  When  there  are  more  substitutes  than  principals,  the 
overphis  ceases  to  he  substitutes,  and  necessarily  becomes  a 
fraud.  It  is  impossible  to  represent  value,  when  there  is  no 
value  to  represent.  A  thousand  paper  dollars  cannot  be  repre- 
sented by  five  hundred  coin  dollars,  both  being  possessed  of 
equal  debt-paying  power.  Yet,  if  this  doctrine  of  intrinsic 
value  in  money  should  be  strictly  apphed,  there  is  not  enough 
of  this  kind  of  value  to  redeem  one  per  cent,  of  the  money  obli- 
gations of  the  world.  There  is  not  enough  to  pay  one-half  the 
yearly  interest  on  national  and  corporate  inde1)tedness. 

This  idea  has  been  so  far  exploded  that  ninety  per  cent,  of 
all  the  business  of  the  world  is  done  with  money  having  no  in- 
trinsic value.  Some  will  say  these  representatives  of  money 
are  good.  That  may  be  true,  Init  their  worth  comes  only 
through  a  strained  confidence  in  business  men.  The  persons 
issuing  them  may  be  rich  in  2^'^^oi)erty ^  l)ut  property  is  not 
money.  The  fact  is,  this  kind  of  money  is  good  as  currency 
until  the  principal  is  called  for,  then  the  fact  of  its  being  a 
representative  of  an  obsolete  idea  becomes  painfully  ap- 
parent. 

The  material  upon  which  the  imprint  that  makes  money  is 
stamped  may  have  a  commercial  value,  but  the  money — the 
int^ignia  of  a  nation's  sovereign  authority — never. 

The  precious  metals  change  less  in  value  than  other  com- 
modities, silver  nmch  less  than  gold  ;  but  both  being  products 
of  labor,  and  controlled  l)y  the  same  factors  that  control  all 
otlier  labor-products,  must  fluctuate  in  value  as  the  circum- 
stances under  which  they  exist  change.  These  two  metals, 
aside  from  their  money  functions,  are  governed  ]>y  the  same 
rules  which  govern  all  other  metals,  and  are  exempt  from  none. 
They  are  more  valuable  because  of  their  scarcity,  and  more 
precious  because  of  the  difficulty  connected  with  their  acquisi- 
ti(m.  If  gold  was  as  plenty  as  iron,  it  would  not  be  as  valua- 
ble, because  it  could  not  l>e  as  useful  to  man  as  iron.     The  ex- 


VALUE    AND    ITS    RKLATION    TO    M<jXEY.  201 

periment  has  been  tried  for  a  long  series  of  years  to  maintain 
2  certain  ratio  between  silver  and  gold  for  the  purpose  of 
securing  a  uniform  standard  of  payment.  While  these  two  met- 
als are  less  apt  to  fluctuate  than  others,  it  is  certain  that  they 
do  vary,  and  have  maintained  their  ratios  but  for  short  periods 
at  a  time.  In  this  relation  they  act  as  a  check  upon  each  other 
and  should  never  be  separated  in  their  legal  functions. 
That  gold  and  silver  fluctuate  in  value,  I  quote : 

"  By  limiting  the  quantity  of  money,  it  can  be  raised  to 
any  coneeival)le  value.  It  is  on  this  principle  that  paper  mon- 
ey circulates." — David  Ricardo. 

"  Thus  it  appears  that,  whatever  may  be  the  material  of 
the  money  of  a  country,  whether  it  consists  of  gold,  silver, 
copper,  iron,  salt,  cowries,  or  paper,  and  however  destitute  it 
may  be  of  any  intrinsic  value,  it  is  yet  possible,  by  sufliciently 
limiting  its  quantity,  to  raise  its  value  in  exchange  to  any  con- 
ceivable extent." — Prof.  McCulloch. 

"  It  is  well  known  that  the  discovery  of  America  (with  its 
rich  deposits  of  gold  and  silver)  was  followed  by*a  great  and 
permanent  fall  in  the  price — purchasing  power — of  the  precious 
metals,  Avhich  reduced  it  to  one-fourth  of  tlieir  previous  rela- 
tive value  to  all  other  commodities." — Albert  Galktin. 

"From  17S9  to  1809  gold  fell  45  per  cent.  From  1809  to 
1849  it  rose  in  value  145  per  cent." — William  Stanley  Jevons. 

Humboldt  says  that  the  gold  and  silver  money  in  circula- 
tion in  the  eighteenth  century  is — at  the  time  he  wrote — thirty 
times  greater  than  in  the  fifteenth  century,  and  that  its  value 
or  purchasing  power  was  only  one-twelfth  of  what  it  then  was — 
that  is,  8  1-2  cents  would  then  buy  as  much  as  100  would  at 
the  time  he  wrote. 

Prof.  Bonamy  Price  says  that  the  purchasing  power  of 
the  so-called  precious  metals  has  fallen  fourteen  times  since  the 
reign  of  the  Henrys — that  is,  7  1-7  cents  would  then  buy  as 
much  as  100  will  now. 

Laveleye  illustrates  this  very  handsomely  in  this  paragraph: 

"This  innnense  stock  of  the  precious  metals  lessens  the 
variations  in  the  value  which  might  result  from  the  variations 
in  the  annual  supply,  just  as  tlie  level  of  a  great  lake  is  little 


£ 


202  PHILOSOPHY  OF    PRICE. 

affected  by  any  changes  in  the  discharge  of  the  rivers  which 
flow  into  it." 

Adam  Smith,  Wealth  of  Xations,  p.  38,  says: 

"Gold  and  silver,  however,  like  every  other  commodity, 
are  sometimes  cheaper  and  sometimes  dearer;  sometimes  of 
easier  and  sometimes  of  more  difficult  purchase.  The  discov- 
ery of  the  abundant  mines  of  America  in  the  16th  century, 
reduced  the  value  of  gold  and  silver  in  Europe  to  about  onfe- 
third  of  what  it  had  l)een  before,  and  this  revolution  in  their 
value,  though  perhaps  the  greatest,  is  by  no  means  the  only 
one  of  which  history  gives  some  account.  But,  as  a  measure 
of  (juautity,  such  as  a^foot,  fathom,  or  handful,  which  is  con- 
tinually varying  in  its  own  quantity,  can  never  be  an  accurate 
raeasure  of  the  quantity  of  other  things,  so  a  commodity  which 
is  itseM  continually  varying  in  its  own  value  can  never  be  an 
accurate  measure  of  the  value  of  other  commodities." 

*  "Silver,  in  bullion  or  money,  changes  its  value  from  any 
change  in  its  quantity,  or  in  the  demand  for  it.  In  either  of 
these  cases  goods  are  said  to  be  dearer  or  cheaper ;  but  'tis  sil- 
ver or  money  is  dearer  or  cheaper,  being  more  or  less  valuable, 
and  equal  toa  greater  or  lesser  quantity  of  goods." 

f  "The  value  of  money  is  inversely  as  general  prices:  fall- 
ing as  they  rise,  and  rising  as  they  fall.  *  *  * 
Let  it,  therefore,  be  remembered — and  occasions  will  often 
arise  calling  it  to  mind — that  a  general  rise  or  a  general  fall  of 
value.'i  is  a  contradiction,  and  that  a  general  rise  or  general  fall 
of  prices  is  tantamount  to  a  rise  or  fall  in  the  value  of  money." 

X  "But  there  is  abundance  of  evidence  to  prove  that  the 
value  of  gold  has  undergone  extensive  changes.  Bet^\  een  1789 
and  1809,  it  fell  in  the  "ratio  of  100  to  54,  or  by  46  per  cent., 
as  I  have  shown  in  a  paper  on  the  variation  of  prices  since 
1782,  read  to  the  London  Statistical  Society  in  June,  1865. 
From  1809  to  1849  it  rose  again  in  the  extraordinary  ratio  of 
too  to  245,  and  by  145  per  cent.,  rendering  government  annui- 
ties and  all  tixed  payments,  extending  over  this  period,  almost 
two-and-a-half  times  as  valuable  as  they  were  in  1809.  Since 
1849,  the  value  of  gold  has  again  fallen  to  the  extent  of  at 
least  20  per  cent.,  and  a  careful  study  of  the  fluctuations  of 
prices,  iis  shown  either  in  the  American  Reviews  of  Trade  of 
tlie  Economist  newspaper,  or  in  the  paper  referred  to  above, 

*,Tolin  Tiaw:  Money  and  Trade  Consiciered,  chap.  v. 

+.1.  S.  Mill:  Principles  of  Political  Economy,  page  267-397 

;:W.  Stanley  Jevons'  Mechaniam  of  Exchange,  p.  325. 


VALUE  AND  ITS  RELATION  TO  MONEY.         203 

shows  tliat  fluctuations  of   from  10   to  25  per  cent,  occur  in 
every  credit  cycle." 

*  '"The  precious  metals  are  often  spoken  of  as  '  the  standard 
of  value,'  which  is  true  only  in  a  restricted  sense.  A  standard 
must  remain  the  same,  liowever  other  things  change ;  and  this 
is  certainly  not  true  of  gold  and  silver.  Their  purchasing 
power  has  been  continually  varying,  geMcrally  declining,  as  the 
natural  deposits  of  their  ores  have  been  laid  bare,  and  the  resist- 
ance of  nature  to  those  who  searched  for  them  has  diminished.'' 

EEPOKT    FROM    THE    SELECT    COMMITTEE    ON    THE    HIGH    PRICE   OF 

GOLD    BULLION. 
{Ordered  by  the  House  of  Commons,  to  he  printed*  June  8,  1810.) 

'•  The  Select  Committee  appointed  to  enquire  into  the  cause 
of  the  High  Price  of  Gold  Bullion,  and  to  take  into  con- 
sideration the  state  of  the  Circulating  Medium,  and  of  the 
Exchanges  Ijetween  Great  Britain  and  Foreign  Parts ; — and 
to  report  the  same,  with  their  Observations  thereupon, 
from  time  to  time,  to  the  House ; — Have,  pursuant  to  the 
Orders  of  the  House,  examined  the  matters  to  them  re- 
ferred ;  and  have  agreed  to  the  following  report : 

Your  Conmiittee  proceeded,  in  the  first  instance,  to  ascer- 
tain what  the  price  of  gold  bullion  had  been,  as  well  as  the 
rates  of  the  foreign  exchanges,  for  some  time  past ;  particular- 
ly during  the  past  year. 

Your  Committee  have  found  that  the  price  of  ^old  bull- 
ion, which,  by  the  regulations  of  His  Majesty's  ]\Iint,  is  3/. 
176-.  10  1-2^7.  per  ounce  of  standard  fineness,  was,  during  the 
years  1806,  1S07  and  1808,  as  high  as  U.  in  the  market. 
Towards  the  end  of  1808  it  began  to  advance  very  rapidly,  and 
continued  very  high  during  the  whole  year  1809 ;  the  market 
price  of  standard  gold  in  bars  fluctuating  from  4/.  9,.*.  to  \l. 
12.S-.  per  oz.  The  market  price  at  4Z.  loi.  is  about  15  1-2  per 
cent,  above  the  Mint  price. 

Your  Committee  liave  found,  that  during  the  first  three 
months  of  the  present  year,  the  pric§  of  standard  gold  in  bars 
remained  nearly  at  the"  same  price  as  during  last  year ;  viz., 
from  4^.  106\  to  4/.  12.S'.  per  oz.  In  the  course  of  the  months 
of  March  and  April,  the  price  of  standard  gold  is  quoted  but 
4/.  once  in  Wettenhall's  tables,  viz.,  on  the  6th  of  x\pril  last,  at 
66-.  which  is  rather  more  than  10  percent,  above  the  Mint  price. 

It  will  be  found  by  the  evidence,  that  the  high  price  of 
gold  is  ascribed,  by  most  of  the  witnesses,  entirely  to  an  alleged 
*R.  E.  Thompson:  Social  Science  and  Nat.  Economy,  p.  160. 


204  PHILOSOPHY  OF  PRICE. 

scarcity  of  that  article,  arising  out  of  an  unusual  demand  for 
it  upon  the  continent  of  Europe.  This  unusual  demand  for 
gold  upon  the  continent  is  described  l)y  some  of  them  as  being 
chiefly  for  the  use  of  the  French  armies,  though  increased  also 
by  that  state  of  alarm,  and  failure  of  conlidence,  which  leads 
to  the  practice  of  hoarding." 

Mr.  Patterson  : 

"The  effect  of  the  Eastern  Trade  upon  the  value  of  the 
precious  metals  has  hitherto  attracted  but  little  attention  ;  yet, 
without  a  perception  and  appreciation  of  the  facts  which  we 
have  now  set  forth,  the  events  connected  with  the  value  of 
money  during  the  last  quarter  of  a  century  would  be  wholly 
inexplicable.  It  has  been  the  drain  of  the  precious  metals  to 
the  East,  to  meet  tlie  requirements  of  Indian  trade  and  invest- 
ments, which  alone  has  falsified  the  confident  ]iredictions  of  all 
the  highest  authorities  as  to  a  stupendous  fall  in  the  value 
of  money,  and  especially  of  gold.  But  one  remarkable  cir- 
cumstance still  remains  to  be  explained — namely,  the  recent 
fall  in  the  value  of  silver;  which  event,  likewise,  is  the  very 
opposite  of  what  was  expected.  Tlie  currency  of  the  East  is 
silver,  and  consequently  it  is  in  silver  that  the  greater  part  of 
the  enormous  payments  of  specie  to  India  have  been  made. 
How,  then,  does  it  happen  that  it  is  silver,  and  not  gold,  that 
has  fallen  in  value  ?— fallen,  or  apparently  fallen,  in  the  West, 
while  its  value  is  still  maintained  in  the  East? 

When  the  new  gold-mines  were  discovered  it  was  univer- 
sally predicted  that,  while  gold  would  lose  a  great  part  of  its 
old  value,  the  value  of  silver  would  be  fully  maintained.  And 
had  the  extraordinary  expansion  of  the  Eastern  trade  been 
foreseen,  it  must  have  been  predicted  that  silver  would  not 
only  maintain  its  old  value,  but  rise  almost  to  a  famine-price. 
As  is  well  known,  silver  did  for  several  yeai-s  rise  in  value 
compared  to  gold ;  although  we  think  there  is  ground  for  be- 
lieving that  the  rise  was  not  absolute — i.  e.,  as  measured  in 
general  commodities,  Init  .was  only  e(pial  to,  and  produced  by, 
the  contenq)oraneous  decline  in  the  vahie  of  gold.  Be  tliat  as 
it  may,  for  ujnvards  of  twenty  years  subsequent  to  185(J,  the 
price  of  silver,  as  measured  in  gold,  stood  considerably  above  its 
old  value — rising  from  59  3-4//  per  ounce  to  62^7,  and  tlien  declin- 
ing to  its  old  value — or  a  fraction  below  it — viz.,  59  l-4.'7  in  1873. 
Considering  the  facts  of  the  case,  this  rise  in  the  value  of  silver 
was  a  very  small  one.  As  we  liave  shown,  between  1858  and 
1865,  the  amount  of  silver  exported  to  India  actually  absorbed 


VALUE    AND    ITS    RELATION   TO   MONEY.  205 

the  entire  contemporaneous  yield  of  the  silver  mines,  and 
£40,000,000  more.  In  otlier  -words,  this  drain  of  silver  to  the 
East  was  equivalent  in  its  effects  upon  Europe  and  America  to 
an  entire  stoppage  of  the  silver  mines,  together  with  an  actual 
drain  and  deduction  of  £40.000,000  from  the  existing  curren- 
cy of  tlie  "Western  world.  But  in  1873  the  tables  turned,  and 
silver  began  to  decline  rapidly  in  value  compared  to  gold — 
reaching  its  lowest  point  in  1876,  the  year  of  the  Silver  JPanic, 
when  the  price  fell  to  47^?.  per  ounce.  To  some  extent,  doubt- 
less, this  fall  in  the  value  of  silver  may  be  ascrilied  to  the 
recent  comparative  scarcity  of  gold,  occasioned  by  the  decreased 
■3roduction  of  the  gold  mines.  It  has  also  been  owing  to  the 
arge  increase  in  the  supply  of  silver  from  the  new  Xevada 
mines;  and  also  to  the  fact  that,  owing  to  the  increase  of 
wealth,  silver  has  recently  been  gradually  becoming  less  suita- 
ble as  currency  in  the  leading  countries  of  the  Western  world, 
and  has,  to  a  great  extent,  Ijeen  legislatively  demonetized  in 
some  of  those  countries, — viz..  in  Germany  and  Scandinavia, 
and  partially  in  the  United  States  and  France." 

From  the  foregoing  excellent  authority  I  have  clearly 
proven  that  both  gold  and  silver  fluctuate  in  value.  How  is  it 
possible,  then,  to  measure  correctly  when  the  measure  itself  is 
defective  ? 

That  gold  has  varied  in  its  value,  and  that  gold  and  silver 
have  varied  in  their  ratio  to  each  other,  I  give  the  following 
carefully  prepared  tal)le : 

Gold,  coined  and  uncoined,  has  varied  greatly  in  valu« 
within  historic  times.     A  pound  of  gold  in  London  brought : 

A.  D.  1344 £15  00s.  Od.  or  $  75.00 

"  1345 13   3   4   or   65.83 

"  1347 

"  1412 

"  1464 

"  1526 

"  1549 

"  1605 

"  1626 

"  1718 

That  is  the  value  of  a  pound  of  gold,  Troy  weight,  to-day. 

The  relative  values  of  gold  and  silver  have  changed  at 
different  times,  and  we  have  collated  a  few  of  the  more  note- 
worthy variations  in  the  subjoined  table : 


14 

00 

0 

or 

70.00 

16 

13 

4 

or 

83.32 

20 

16 

8 

or 

104.16 

27 

00 

0 

or 

135.00 

34 

00 

0 

or 

170.00 

40 

10 

0 

or 

202.50 

44 

10 

0 

or 

222.50 

46 

14 

6 

or 

233.62 

206  PHILOSOPHY    OF    PRICE. 

Herodotus  recorded  that 1  part  goid  equaled  13               of  silver 

Alexander  the  Great's  time 1  "  "  "  10 

Rome  after  Punic  War 1  "  "  "  17.57 

Rome  under  Julius  Cj«sar 1  "  "  "  18.93 

Century  after  Columbus 1  "  "  '  10       to  12      " 

Following  two  centuries 1  "  "  "  14       to  16      " 

England  under  William.,  1689 1  "  "  "  15 

Berlin  in  1838 1  "  "  "  15.69 

United  States  laws,  1792  and  1834..  1  "  "  "  .15    &  15.87    " 

France  under  and  since  empire 1  "  "  "  15.50               " 

I  have  stated  that  value  never  did,  and  never  can,  measure 
value,  any  more  than  corn  can  measure  corn  ;  the  idea  of  quan- 
tity alone  determines  that.  Kot  only  the  quantity  to  be  meas- 
ured, but  the  size  of  the  measure  as  well.  It  is  no  more  cor- 
rect to  say  that  value  shall  be  measured  by  a  gold  dollar  than 
that  a  yard  shall  be  measured  by  a  gold  yard-stick.  We  are 
told  that  a  yard  used  to  be  the  length  of  the  King's  arm.  It 
increased  and  decreased  in  length  with  the  stature  of  the  king. 
So  with  the  measure  of  gold  or  silver;  it  increases  and  de- 
creases with  the  amount  of  it  in  sight  or  in  use. 

Quantity  is  the  fundamental  element  that  establishes  value. 
In  the  attempt  to  evade  this  general  law  all  the  swindles  inci- 
dent to  the  use  of  money  originate.  As  I  have  stated  in  a 
previous  chapter,  I  repeat  in  substance  again, — demonetize 
both  gold  and  silver,  and  at  the  same  time  permit  the  unlimited 
coinage  of  both.  Then  authorize  the  Government  to  issue 
paper  money,  redeemed  by  taxes,  to  the  amount  of  not  less 
than  fifty  dollars  per  capita.  This,  in  my  judgment,  is  a  com- 
plete solution  of  the  whole  currency  question.  With  this  cur- 
rency there  could  be  no  variation.  Gold  and  silver  would  still 
be  worth  their  commodity  value  the  same  as  now,  with  one  ex- 
ception. This  commodity  value  would  be  a  thing  to  sell  in- 
stead of  an  instrument  to  measure  values,  as  is  now  the  case. 
Neitiier  gold  nor  silver  is  a  fair  measure  of  value.  The  com- 
mercial value  of  one  commodity  can  never  be  determined  by 
the  commercial  value  of  another,  with  any  degree  of  equity, 
for  any  length  of  time,  because  the  relations  existing  at  one 
time  are  rarely  the  same  at  another.     The  commercial  value  of 


VALUE   AND   ITS    RELATION    TO   MONEV.  207 

the  metal  in  the  gold  or  silver  dollar  makes  the  size  of  the 
measure,  as  judged  by  them,  with  an  increase  or  decrease  cor- 
responding to  its  value  commercially.  There  is  an  increase  or 
decrease  in  the  commercial  value  of  all  commodities  measured 
by  them.  If  every  factor  in  all  business  transactions  could 
remain  stationary  this  might  do,  but  we  know  that  at  any  mo- 
ment changes  of  conditions  may  occur  that  will  affect  not  only 
the  material  but  moral  world.  We  can  no  more  take  gold  and 
silver  at  a  certain  ratio  of  value  as  compared  with  each  other, 
and  measure  labor  and  its  products,  than  we  can  take  a  busliel 
of  wheat  and  a  bushel  of  corn  for  the  same  purpose.  The 
ratio  of  value  between  the  two  measures  of  value  cannot  be 
maintained  with  any  degree  of  accuracy,  much  less  tlie  ratio  of 
all  other  products.  If  corn  should  be  a  failure  one  year,  there 
would  have  to  be  more  wheat  in  the  bushel.  On  the  other 
hand,  if  wheat  should  be  a  failure,  more  corn  would  be  put  in 
the  bushel,  not  to  measure  values  by  alone,  but  to  keep  the 
ratio  exact  between  the  two  measures.  This  process  seems 
burdensome  and  unnecessary.  Some  nations  have  one,  and 
some  another  ratio  by  weight  between  the  two  metals.  During 
the  war  the  bullion  in  a  silver  dollar  was  worth  three  and  a 
half  per  cent,  more  than  the  bullion  in  a  gold  dollar.  It  is 
claimed  now  that  gold  buHion,  with  the  same  ratio  of  weight, 
is  worth  the  most.  Who  can  tell  ?  When  the  commercial  value 
of  the  two  measures  of  value  is  changeable  and  uncertain,  how 
can  their  measurement  be  accurate  ? 

For  these  and  many  other  reasons  that  might  be  advanced  ■ 
I  believe  the  time  is  near  at  hand  when  our  circulating  medium 
will  be  based  on  taxation.     This  nation  could  float  at  par  fully 
two  bilhons  of  paper  money  based  on  our  present  taxation. 
This  would  not  only  be  safe  but  always  uniform. 

The  difference  between  a  treasury  and  a  bank  is,  one  pays 
out  money,  while  the  other  loans  it.  Let  tlie  government  say  to 
the  people :  We  will  pay  you  this  money  for  services  and  material 


208  PHILOSOPHY    OF    PRICE. 

for  public  use,  and  will  receive  it  from  you  for  all  taxes — State 
as  well  as  national.  "Who  will  doubt  the  success  of  the  enter- 
prise? The  taxation  for  ordinary  government  expenses  and 
internal  improvements  actually  necessary  for  this  great  nation 
would  amount  to  from  five  to  eight  hundred  milKons  per 
annum.  What  a  permanent  and  safe  basis  tliis  would  make  for 
a  circulating  medium.  In  connection  with  an  unlimited  coin- 
age of  gold  and  silver  this  would  give  us  purely  an  American 
currency  for  an  American  people. 

The  fatal  mistake  of  our  govei-nm.ent  was  in  paying  one 
kind  of  money  to  the  landholder  and  another  to  the  soldier. 
The  war  would  have  ended  two  years  before  it  did,  and  the 
debt  resulting  would  have  been  merely  nothing  if  a  full  gov- 
ernment legal-tender  had  been  issued  and  kept  in  circulation. 
Besides  this,  there  is  no  such  thing  as  money  value  either  in 
justice  or  in  fact.  There  would  be  one  value  for  gold,  another 
for  silver,  another  for  copper.  Money  measures  value,  and 
therefore  cannot  be  value  itself.  We  want  a  measure  that  can- 
not fluctuate.  Such  a  measure  must  be  an  abstract  thing,  of  no 
intrinsic  value,  but  havinsj  leml  functions.  That  is  exactlv 
the  status  of  the  dollar.  But  men  have  coupled  the  abstract 
idea  with  the  substance  and  given  it  a  commercial  value.  If  we 
should  issue  notes  payable  in  wheat,  the  less  wheat  the  greater 
the  value  of  the  notes ;  the  more  wheat  the  less  would  oe  the 
value  of  the  notes.  Tho  same  rule  applies  to  gold  and  silver, 
because  wheat  and  coin  (bullion)  are  both  commodities  and  sub- 
ject to  similar  variations  in  value.  For  these  reasons  I  submit 
that  notes  or  currency  bottomed  on  taxation  would  l)e  stable 
and  without  any  fluctuation. 

"Metallic  money,  whilst  acting  as  coin,  is  identical  with 
paper  money,  in  respect  of  being  destitute  of  intrinsic  value ; 
with  this  single  difference,  that  when  it  is  desired  to  reproduce 
that  intrinsic  value,  the  sovereign  can  be  instantly  turned  into 
bullion.  *  *  *  Still,  M'hilst  circulating,  ])oth  make  no 
use  of  intrinsic  value ;  and  this  is  the  great  point  to  grasp 
firmly." — North  British  Review,  Nov..  1861. 


PKOTECTION    TO   HOME    INDUSTKY,    ETC.  20d 


CHAPTER  YI. 

PKOTECTION    TO    HOME    INDUSTRY    AND    CONTEACTION   OF 

CUKKENCY. 

I  am  a  firm  believer  in  a  protective  tariff.  Not  an  exces- 
sive tariff,  but  one  sufficient  to  afford  ample  protection  to  our 
native  industries. 

Our  free,  intelligent,  civilized  labor  should  not  be  com- 
pelled to  compete  with  foreign  servile,  ignorant,  half-civilized 
labor  upon  our  own  soil. 

"We  should  not,  under  any  circumstances,  permit  foreign 
pauper  labor — made  so  by  despotic  laws — to  rob  our  cwn  toil- 
ing millions  of  their  richest  and  most  righteous  inheritance,  a 
home  market  for  the  fruits  of  their  labor. 

The  products  of  every  nation  carry  with  them  in  their 
cost  of  jDroduction,  the  morals,  civilization  and  intelligence  of 
the  country  in  which  they  are  produced,  Tlierefore,  we  sliould 
allow  no  foreign  production  to  compete  with  its  kind  in  our 
own  markets,  unless  it  represents  in  its  cost  value  of  produc- 
tion the  same  elements  of  civilization  that  enter  into  our  own. 
If,  by  reason  of  an  absence  of  these  factors  in  its  cost  of  pro- 
duction, its  value  is  lessened  below  that  with  which  it  seeks  to 
compete,  I  believe  a  tax  should  be  placed  upon  it  to  make  up 
the  discrepancy.  This  should  be  done  that  our  own  laborers 
shall  not  be  compelled  to  dispense  with  their  civilizing  and 
moral  benefits  which  have  placed  them  on  a  higher  and  hap- 
pier plane  of  social  existence  than  their  less  fortunate  compet- 


210  PHILOSOPHY     O'F    PRICE. 

iters.     In  doing  this  we  simply  obey  Nature's  first  great  law — 
eelf-preservation. 

At  the  present  time,  with  our  alleged  surplus,  there  is 
much  discussion  about  the  markets  of  the  world.  Many  of 
our  people  are  anxious  to  compete  for  their  surmised  benefits. 
There  is  nothing  to  prevent  such  action,  even  now.  There  is 
no  law  on  our  statute  books  against  such  competition.  The 
farmer  or  manufacturer,  if  dissatisfied  with  the  home  market, 
can  go  to  that  of  any  other  country,  as  there  is  no  export  duty. 
But  when  once  out  from  under  the  flag  of  this  nation,  the 
rules  and  regulations  of  commerce  of  the  nation  to  which  they 
would  go  must  be  obeyed. 

The  reason  our  exports  are  not  larger  is  because  some 
other  people  sell  similar  products  cheaper.  The  only  question 
asked  by  a  purchaser  is,  "Where  can  I  buy  the  product  I  want 
cheapest  ?"  When  that  condition  is  complied  with,  nothing  is 
easier  than  large  sales.  Wheat  will  serve  as  an  example  to 
illustrate  this  fact.  Russia  and  India  compete  with  us  in  the 
sale  of  that  cereal.  Our  wheat  goes  into  the  market  as  the 
product  of  well-paid,  well-fed,  intelligent,  free  lal^or.  It  rep- 
resents in  its  first  cost  its  share  of  the  taxation  that  built  our 
highways,  bridges,  and  improved  our  water  ways ;  that  pays  for 
our  free  schools,  our  institutions  of  charity  and  reform,  our 
churches,  and  the  expense  of  our  moral  training  ;  the  enforce- 
ment of  laws  for  protection  to  life  and  property,  and  the  gen- 
eral welfare  of  the  people.  These,  in  part,  are  the  objects  for 
which,  not  only  this  product,  but  all  others  in  this  nation,  arc 
compelled  to  contribute.  The  product  of  our  competitors  pre- 
sents a  far  different  example.  It  represents  ignorance,  supersti- 
tion, and  'a  want  of  moral  culture.  It  brings  with  it  no  smile 
of  civilization,  none  of  the  higher  conditions  of  freedom,  but 
instead,  it  comes  weighted  with  the  blight  of  oppression,  and 
brings  with  it  the  foul  breath  of  beastly  instincts.  Neverthe- 
less, these  products  compete  with  ours.     If  we  must  meet  this 


PEOTECTIOX    TO    HOME    INDUSTRY,    ETC.  211 

competition,  if  we  must  give  up  our  home  markets  and  go 
abroad,  our  duty  is  plain — we  must  look  to  the  first  cost  of  our 
productions,  which  alone  will  enable  us  to  sell  cheap.  Every 
factor  that  enters  into  this  first  cost  must  be  eliminated  that  is 
possible.  Every  endeavor  must  be  made  to  render  our  produc- 
tions cheaper  than  those  of  other  countries ;  for  by  this  means 
only  can  success  be  expected.  In  following  out  this  line  we 
must  ignore  public  improvements,  and  suffer  those  already 
made  to  go  uneared  for  ;  do  away  with  our  public  school  sys- 
tem ;  destroy  our  other  institutions  of  learning  and  charitt : 
open  the  doors  of  our  penitentiaries,  and  close  the  doors  of  our 
churches.  In  a  word,  wipe  out  the  means  by  which  the  com- 
mon  desire  of  our  people  to  excel  in  all  that  ennobles  our  race 
can  be  satisfied,  and  we  will  then  be  on  the  high  road  toward 
successful  industrial  competition. 

One  of  two  conditions  must  be  brought  about.  The  civ- 
ilization of  other  nations  must  be  raised  to  the  same  plane  as 
ours,  or  our  civilization  must  be  lowered  to  the  level  of  theirs, 
before  anything  like  just  or  fair  competition  can  be  entered  into. 

In  order  to  make  this  argument  complete,  there  are  two 
other  important  factors  to  take  into  consideration, — first,  for- 
eign immigration,  and  second,  domestic  currency,  both  of 
which  are  of  vital  consequence  to  this  question. 

It  is  not  right  to  keep  the  manufactured  end  of  a  piece  of 
cloth  protected  from  foreign  competition,  and  at  the  same  time 
permit  the  labor  end  of  this  piece  of  cloth  to  stand  open  for  the 
labor  competition  of  the  world.  If  the  manufacturer  is  per- 
mitted to  go  abroad  for  his  workmen,  let  the  laborer  go  also  for 
his  clothes.  If  the  laborer  is  debarred  from  importing  his  coat,  let 
the  manufacturer  be  denied  the  right  to  import  his  help.  Free 
trade  in  fnen  and  protection  of  manufactured  articles  builds 
up  monopolies,  and  makes  the  rich  richer,  and  the  poor  poorer. 
Either  protect  both,  or  make  both  free ;  that  is  the  doctrine  of 
common  sense,  and  must  sooner  or  later  prevail. 


212  PHILOSOPnY    OF    PRICE. 

For  twenty-five  years  this  Government  Las  been  gnided 
by  a  protective  tariff,  based  upon  conjectured  benefits,  and  the 
acknowledged  purpose  of  bettering  the  condition  of  the  labor 
ing  man — to  make  him  more  intelligent,  more  happy,  and 
better  fitted  for  a  higher  plane  of  civilization.  During  twenty 
years  of  that  time  the  following  law  has  been  upon  our  statute 
books.  Read  it  carefully,  and,  if  possible,  imagine  a  more 
gigantic  fraud,  a  more  colossal  example  of  h}'pocrisy  possible. 
The  bulk  of  those  who  honestly  believe  in  the  docti'ine  of  pro- 
tection, would  hardly  believe  such  an  imposition  possible : 

''^JBe  it  enacted  hy  the  Senate  and  House  of  Representatives  of 
the  United  States  of  America  in  Congress  asseinbled: 

Sec.  1.  That  the  President  of  the  United  States  is  hereby 
authorized,  by  and  with  the  advice  and  consent  of  the  Sen- 
ate, to  appoint  a  commissioner  of  immigration,  who  shall  be 
subject  to  the  direction  of  the  Department  of  State,  shall  hold 
liis  ofiice  for  four  years,  and  shall  receive  a  salary  at  the  rate  of 
two  thousand  five  hundred  dollars  a  year.  The  said  commis- 
sioner may  employ  not  more  than  three  clerks,  of  such  grade 
as  the  Secretary  of  State  shall  designate,  to  be  appointed  by 
him,  with  the  approval  of  the  Secretary  of  State,  and  to  hold 
their  ofiices  at  his  pleasure. 

Sec.  2.  And  he  it  further  enacted^  That  all  contracts  that 
shall  be  made  by  emigrants  to  the  United  States  in  foreign 
countries,  in  conformity  to  regulations  that  may  be  established 
by  the  said  coTumissioner,  whereby  emujrants  shall  pledge  the 
wages  of  their  lahor  for  a  term  not  exceeding  tioelve  months, 
to  repay  the  expenses  of  their  emigration,  shall  be  held  to  be 
valid  in  law,  and  may  be  enforced  in  the  courts  of  the  United 
States,  or  of  the  several  States  ;;nd  Territories ;  and  such  ad- 
vances, if  so  stipulated  in  the  contract,  and  the  contract  be 
recorded  in  the  recorder's  ofiice  in  the  county  where  tlie  emi- 
grant shall  settle,  shall  operate  as  a  lien  upon  any  land  there- 
after acyuired  hy  the  emigrant^  whether  under  the  homestead 
law  when  the  title  is  consummated,  or  on  property  otherwise 
acquired  until  liquidated  hy  the  emigrant j  but  noticing  here- 
in contained  shall  be  deemed  to  authorize  anv  contract  contra- 
vening  tlie  Constitution  of  the  United  States,  or  creating  in 
any  way  the  relation  of  slavery  or  servitude. 

Sec.  3.  And  he  it  further  enacted.  That  no  emigrant  to 
the  United  States  who  shall  arrive  after  the  passage  of  this  act 


PROTECTION    TO   HOME    INDUSTRY,    ETC.  213 

shall  be  compulsively  enrolled  for  military  service  during  the 
existing  insurrection,  unless  such  emigrant  shall  voluntarily 
renounce  under  oath  his  allegiance  to  the  country  of  his  Ijirtli, 
and  declare  his  intention  to  become  a  citizen  of  the  United 

States." 

Such  an  act  as  this  does  not  tend  to  streno-then  a  belief  in 
the  integrity  of  those  benefited  through  a  protective  tariff. 

Every  speaker  or  writer  upon  this  subject  undertakes  to 
show  that  this  restriction  on  commerce  is  for  the  entire  benefit, 
in  the  ultimate,  of  the  laborer.  While  at  the  same  time  an- 
otlier  law  made  by  the  same  party,  and  under  the  same  admin- 
istration, pours  into  this  nation,  to  compete  with  its  laborers, 
this  stream  of  filthy  pauper  laborers  from  foreign  countries 
under  contract.  To  make  absurdity  absurd,  in  the  general 
appropriation  bill  passed  a  few  months  after  the  one  quoted 
above,  was  the  following : 

"For  expenses  under  the  act  of  Congress  to  carry  into  effect 
the  treaty  between  the  United  States  and  Her  Britannic  Majes- 
ty for  the  suppression  of  the  African  slave-trade,  seventeen 
thousand  dollars. 

For  exj^enses  under  the  act  to  encourage  immigration, 
twenty-five  thousand  dollars." 

Seventeen  thousand  dollars  to  put  down  black  slavery,  and 
twenty-five  thousand  dollars  to  inaugurate  a  system  of  white 
slavery,  in  order  to  make  protection  protect.  This  first  propo- 
sition must  be  seriously  considered. 

•  Second.  Protection  of  home  industry  and  contraction  of 
currency  cannot  be  successful  in  the  same  country.  ISTo  gov- 
ernment can  enforce  both  of  these  propositions  and  be  pros- 
perous for  any  great  length  of  time.  The}'  are  diametrically 
opposed  to  each  other.  To  protect  home  industry  is  to  increase 
our  home  business.  The  more  successful  protection  is,  the 
more  these  business  transactions  will  be  multiplied.  The  found- 
ations on  which  this  great  doctrine  stands  are  home  markets 
and  home  consumption.  The  purj^ose  of  protecting  our 
domestic  industries  is  to  increase  tlie  volume  of  our  domestic 


214  PEILOSOPHY    OF    PRICE. 

or  national  business.  The  more  it  is  practiced,  the  larger  pro- 
portions will  the  transactions  assnme.  On  the  other  hand,  con- 
traction means  a  limitation  of  the  currency  to  the  smallest 
possible  amount,  thereby  taking  away  the  very  means  by  which 
business  transactions  are  made  practicable.  All  values  are 
measured  with  money,  and  all  business  transactions  are  leveled 
up  with  money.  Consequently,  the  amount  of  business  must 
conform  to  the  volume  of  currency  in  circulation.  "More 
business  transactions  with  less  currency  "  is  pure  fiction.  The 
engineer  might,  with  equal  reason,  attempt  to  run  more  ma- 
chinery with  less  power.  The  ideas  of  protection  and  contrac- 
tion are  contradictory,  and  can  never  be  successfully  enforced 
together. 

I  hftve  clearly  demonstrated  in  the  previous  chapters  of 
this  book  that  the  ability  to  purchase  establishes  the  price  of 
our  products.  Another  proposition  I  desire  to  state  is,  that 
when  we  do  not,  for  any  reason,  no  matter  what  it  may  be,  see 
fit  to  avail  ourselves  of  the  price  or  commercial  value  placed 
up®n  our  products  by  the  ability  to  purchase  which  our  own 
people  can  offer,  and  go  to  some  other  nation  to  sell,  we  are 
simply  exchanging  the  ability  which  that  nation  has  to  pur- 
chase, for  that  of  our  own.  Many  times,  in  that  case,  the  price 
or  ability  to  purcliase  of  the  foreign  nation  not  only  establishes 
the  commercial  value  of  tlie  exports,  but  of  all  that  is  con- 
sumed at  home.  If  we  exported  no  wheat  or  fiour,  our  own 
markets  would  govern  their  price.  But  now  the  London 
market  rules  both ;  that  is,  the  ability  of  England  to  purchase 
breadstuffs  determines  how  nnich  or  how  little  the  American 
consumer  shall  eat.  We  are  met  here  with  the  question  of 
overproduction.  In  reply  I  emphatically  say  there  can  be  no 
overproduction,  but  instead  it  is  always  an  underconsumption 
that  gluts  our  markets.  That  underconsumption  is  an 
unsupplied  demand  for  products,  visible  all  over  the  land. 
The    unrequeited  demand   is  the  result   of  a  lack  of  ability 


PROTECTION   TO    HOME    INDUSTKY,    ETC.  215 

to  purchase.  And  when  our  products  are  sent  abroad  to  he 
sold,  in  ahnost  every  case  it  is  owing,  not  to  a  want  of  demand 
at  lionie  but  to  a  lack  of  abilitj  to  purchase ;  and  it  shows  con- 
clusively that  some  other  nation  is  better  prepared  in  that 
respect  than  ours. 

If  every  person  living  within  the  confines  of  our  national 
borders  was  comfortably  fed,  clothed  and  housed,  there  could 
be  no  surplus.  With  our  present  diversified  industries  it  would 
be  impossible. 

We  exported  in  1883,  the  last  authentic  report  I  have : 

Wheat,  bush 106,385,000 

Flour,  bbls 9,205,000 

All  reduced  to  flour  would  be  about  5,912,280,000  pounds. 
Dividing  this  among  60  millions  of  people  gives  98  1-2  pounds 
to  each,  or  4  1-3  ounces  each  per  day.  That  is,  if  as  a  nation 
we  had  consumed  4  1-3  ounces  of  flour  per  day,  for  each  per- 
son, more  than  was  consumed,  no  wheat  or  flour  would  have 
been  exported. 

Again,  the  same  year  there  was  exported : 

Sheep 337,000 

Cattle 104,000 

Hogs 16.000 

Reduced  to  pounds  would  amount  to  about  71,850,000. 

Hams  and   Bacon 340.258,000 

Beef,   fresh 81 .000.000 

Beef,  salted 41.680,000 

Pork 62.116.000 

Pounds  total 596,904.000 

Divide  this  among  60,000,000  of  people  and  we  have 
less  than  ten  pounds  for  each  person,  or  about  one-half  ounce  of 
meat  per  day  for  each  to  consume,  more  than  was  consumed,  in 
order  that  there  would  be  no  exportation  of  meats.  Our  M'hole 
exports  amounted  to  only  $14.00  per  capita,  or  less  than  four 
cents  each  per  day.  Is  there  anyone  who  doubts  the  present 
demand  in  this  nation  for  4  1-3  ounces  of  flour  and  1-2  ounce 
of  meat  per  day  for  each  person  ?  If  there  ie,  let  him  make  a 
tour  of  the  haunts  of  wretchedness  and  starvation  that  exist  all 


216 


PHILOSOPHY    OF   PKICE. 


about  us  in  every  direction.  Less  than  four  cents  per  day 
expended  by  each  would  keep  all  our  products  at  home,  thereby 
giving  our  people  much  more  labor  and  consequently  a  pro- 
portionate quantity  of  the  comforts  of  life. 

Why  does  this  amount  go  abroad  ?  Certainly,  as  I  have 
shown,  not  for  want  of  home  demand,  but  for  want  of  means 
to  purchase.  This  want  of  ability  to  purchase  their  home 
products  has  been  brought  on  the  people  by  the  contraction  of 
our  circulating  medium. 

For  these  reasons  I  repeat :  Protection  and  Contraction  can 
not  prove  successful.     One  must  give  way  to  the  other. 


11"" 

CONCLUSIONS.  217 


CHAPTER  YII. 


CONCLUSIONS. 


I  have  untertaken  to  show  that  i)rice  is  estabhshed  by  an 
ability  to  purchase;  that  the  abihty  to  purchase  depends 
entirely  upon  the  volume  of  currency  among  the  people ;  and 
that  upon  the  price  of  labor  and  its  products  depends  the  pros- 
perity of  the  civilized  world. 

I  have  shown  clearlj-  in  the  case  of  our  own  nation,  and 
from  the  ablest  writers  and  scholars  of  other  countries,  that, 
with  an  increase  of  currency  prices  advance  and  prosperity  fol- 
lows, while  with  a  decrease  of  currency  prices  fall  and  adversity 
soon  comes.  Toothing  is  plainer  than  the  truth  of  these  propo- 
sitions. In  view  of  the  facts,  what,  as  intelligent  men  having 
the  welfare  of  the  whole  nation  at  heart,  ought  we  to  do  in  the 
matter  ?  We  know  tlie  cause  of  our  ills,  and  where  the  remedy 
lies.  Shall  we  sit  dovrn  and  not  apply  the  remedy — not  make 
an  effort  to  rectify  these  growing  evils  ',  If  we  remain  inactive 
there  should  be  no  further  complaint  if  trouble  overtakes  us  in 
the  near  future. 

Tiie  war  between  labor  and  capital  must  be  settled,  that  is, 
each  must  have  its  rights  as  near  as  possible,  and  then  continue 
in  a  state  of  armed  neutrality  to  protect  each  other  from 
encroachments.  Capital  has  been  the  dictator  for  many  long 
years,  in  consequence  of  which  it  has  reaped  a  r'ch  harvest  of 
wealth.  Labor  has  turned  now,  with  the  desperation  of  long 
continued  spoliation,  and  unless  given  at  least  a  portion  of  its 


218  PHILOSOPHY  OF   f filCE. 

just  dues  may  soon  break  loose  and  no  one  can  tell  tlie  destruo- 
tion  that  may  follow.  There  is  at  the  present  time  a  most  bit- 
ter hatred  existing  among  the  poorer  classes  of  our  people 
toward  the  law-pampered  aristocrat  and  millionaire.  This  hatred 
will  find  vent  at  no  distant  day  if  not  prohibited  |by  just 
counsels  and  fair  legislation. 

Our  laws  are  oppressive  towards  the  poor,  and  generally 
operate  in  favor  of  capital.  There  can  be  no  denial  of  that  fact ; 
and  until  they  are  changed  it  is  useless  to  theorize  upon  the 
matter.  We  have  had  a  dear  dollar  and  a  cheap  day's  work 
long  enough.  The  people  are  getting  tired  of  it.  They  demand 
a  cheaper  dollar  and  a  dearer  day's  work.  Who  can  blame 
them,  and  why  should  their  demand  be  denied  after  having 
given  the  contraction  and  "hard  pan"  policies  of  the  govern- 
ment a  fair  trial  ? 

When  the  services  of  a  skillful  physician  are  required  ho 
first  makes  a  careful  diagnosis  of  the  case  in  order  that  he 
may  locate  the  disease.  He  compares  the  patient  in  health 
with  his  present  condition.  The  difference  between  the  two 
conditions  is  the  malady.  Now,  if  he  should  locate  the  disor 
der  in  the  head,  would  he  prescribe  for  the  feet  ?  or  if  in  the 
lungs,  would  he  give  remedies  for  the  brain  ?  Under  such 
treatment  the  patient  would  die,  and  the  physician  would  be 
disgraced.  The  true  practice  would  be  a  thorough  treatment 
of  the  parts  afflicted,  to  the  end  that  they  might  be  restored  to 
their  normal  condition,  in  which  they  could,  with  the  other 
members  of  the  body,  perform  the  usual  functions  necessary 
to  health  and  life. 

In  applying  the  same  rule  to  our  body  politic,  we  find,  ia 
1866,  health  and  vigor  in  every  part  of  the  system.  Business 
was  good,  wages  were  high,  and  money  plenty.  People  were 
out  of  debt  and  all  were  contented,  prosperous  and  happy.  Ia 
1886,  twenty  years  after,  we  find  the  debts  of  all  kinds  in  the 
nation  equal  to  ninety  per  cent  of   its  equalized  valuation. 


CONCLUSIONS.  219 

We  find  all  business  nearly  at  a  standstill ;  low  prices  and  no 
work ;  our  country  full  of  tramps ;  our  jails  and  poorbouses 
filled  witb  tbose  unable  to  find  labor.  We  see  want  and  distress- 
on  every  hand.  Labor  strikes  and  riots  are  of  daily  occurrence 
and  seem  to  be  on  the  increase.  The  body  politic  of  our  nation 
is  sick.  It  is  stricken  with  lingering  disease.  Where  is  it 
located,  and  what  is  its  nature  ? 

The  blessings  of  Deity — sunshine  and  rain,  day  and  night, 
summer  and  winter,  seed  time  and  harvest,  health  and 
energy — are  granted  us  now  as  they  were  twenty  years  ago. 
Our  people  are  as  industrious,  intelligent  and  economical  now 
as  then.  The  earth  yields  as  rich  harvests;  the  herds  and 
flocks  are  as  prolific.  All  other  bounties  of  nature  are  as 
abundant  as  ever  before.  The  reward  of  labor  in  gross  pro- 
duction never  was  greater  than  at  present.  We  may  search  in 
vain  through  our  whole  economic  or  social  system  and  we  can 
find  but  one  factor  in  the  entire  range  dijfferent  at  this  time 
from  twenty  years  ago.  Then  the  people  had  fifty  and  one- 
half  dollars  per  capita  to  do  business  with,  while  to-day,  at  the 
outside,  they  have  but  |8.  This  is  the  root  of  the  disease,  the 
one  great  factor  in  all  this  present  disorder.  For  twenty  years- 
contraction  has  cursed  our  land  until  it  has  gradually  dried  up 
the  fountains  of  our  prosperity.  The  trail  of  this  serpent  can 
be  clearly  traced  by  the  bleached  bones  of  its  bankrupt  victims — 
109,000  in  20  years.  Can  the  misery  and  despair  of  these 
unfortunates  be  measured  in  money  ?  No  wonder  Mr.  Shella- 
barger  said : 

"They — the  money-loaners — are  seeking  to  coin  the  gains 
of  their  infamy  out  of  the  blood  of  their  sinking  country.' 

Mr.  Kellogg  said : 

"  Mr.  Chairman :  I  am  pained  when  I  sit  in  my  place  in 
the  House,  and  hear  members  talk  about  the  sacredness  of  cap- 
ital; that  the  interests  oi  money  must  not  be  touched.  Yes,  sir; 
they  will  vote  six  hundred  thousand  of  thejiower  of  the  Amer- 
ican youth  for  the  arrny,  to  he  sacrifced^  witlwut  a  hlush,  but. 


220  PHILOSOPHY    OF    PRICE. 

the  great  interests  in  capital  mnst  not  be  touched.  "We  have 
summoned  the  youth,  and  they  have  come.  I  would  summon 
the  capital;  and  if  it  does  not  come  voluntarily,  before  this 
Republic  shall  go  down,  or  one  star  be  lost,  I  would  take  every 
cent  from  the  treasury  of  the  states,  from  the  treasury  of  cap- 
italists, from  the  treasury  of  individuals,  and  press  it  into  the 
use  of  the  Government." 

We  should  call  a  halt ;  demand  that  the  conditions  under 

which  we  were  prosperous  and  happy  should  again  be  restored, 

and  that  at  once. 

"  Money  is  the  life-blood  of  Inisiness.  Make  it  plenty,  all 
business  prospers,  and  working-men  are  employed  at  good 
wages.  Make  it  scarce,  all  business  languishes ;  merchants 
become  bankrupt  and  laborers  are  starving.  Who  don't  know 
this?" 

We  are  encounterino:  the  same  difficulties  which  all 
nations,  in  all  ages  past,  liave  met,  when  the  money  of  account 
has  been  contracted  beyond  the  reach  of  the  people.  Its  path 
has  been  strewn  with  ^vreck  and  ruin,  until  nothing  written  in 
the  pages  of  history  is  more  plainly  seen  than  the  black  pall 
which  has  followed  every  attempt  to  wrong  the  people  by 
enhancing  the  value  of  money.  A  proper  amount  of  currency 
will  regulate  the  equilibrium  between  the  rich  and  poor,  high 
and  low,  visible  and  invisible  capital,  when  all  class  laws. and 
regulations  fail. 

I  quote  from  the  report  of  the  Silver  Commission : 

"  During  certain  periods  in  the  past,  when  prices  have 
been  falling  by  reason  of  a  shrinkage  in  the  volume  of  money, 
a  slow  and  toilsome  advance  has  been  made  in  the  accumula- 
tion of  wealth.  Under  such  conditions  its  just  distribution  is 
impossilile.  A  shrinking  volume  of  money  and  falling  prices 
always  have  had  and  always  must  have  a  tendency  to  concen- 
trate wealth,  to  enrich  the  few,  and  to  impoverish  and  degrade 
the  many.  This  tendency  is  subtle,  active,  and  portentous 
throughout  the  world  to-day." 

Whenever  a  monopolist  gives  public  expression  to  his 
ideas,  he  always  pleads  for  the  laborer,  that  a  cheap  dollar  is 
his  continual  curse.     This  is  only  a  pretext.     Capital  wants  a 


CONCLUSIO>'S. 


221 


dear  dollar  that  it  may  compel  cheap  labor,  while  labor  wants  a 

cheap  dollar  that  it  may  increase  the  value  of  its  earnings. 

•Upon  this  point  I  will  give  the  following  illustration : 

"  Be  it  remembered  ever  that  the  legal,  debt-paying  value  of 
money  never  changes,  except  to  exist  and  not  exist.  The  legal, 
debt-paying  properties — the  property  imparted  by  the  law- 
making power  that  creates  money — never  fluctuates ;  it  is 
stationary,  year  in  and  out.^ 

PROPOSITION   DEMONSTRATED. 


Wages  per  day. 

Cost  of  living,  etc. 

Sum  left. 

$1.00 

50 

25 

12i 

2.00 

4.00 

$0.^5 
37i 
18f 

OH 
1.50 
3.00 

$0.25 
12i 
06i 
03i 

50 

1.1  nt 

Suppose  a  laborer  had  a  mortgage  of  $1,000  on  his  home,, 
which  he  desired  to  pay  as  fast  as  his  earnings  accumulated. 
Let  us  notice  how  high  wages  and  high  cost  of  living  compares 
with  cheap  labor  and" cheap  cost  of  h^ing.  in  the  amount  of  his 
yearly  payments : 


Sums  left. 

Iowa  rate 
10  per  cent. 

Years  work. 

SrS           Davs  needed, 
mteresi. 

$0.25 

12i 
06i 
03i 
50 
1.00 

$100 
100 
100 
100 
100 
100 

Days. 
313 
313 
313 
313 
313 
313 

$100 
100 
100 
100 
100 
100 

400 

800 

1.000 

3,200 

200 

100 

Thus  we  see  that,  81  per  day  and  25  cents  "  left,"  it  takes 
400  days  to  pay  the  interest,  for  interest  and  debt — national, 
State  and  individual — must  be  paid  out  of  "sum  left"  after  cost 
of  hviug  is  paid.  This  being  the  case,  it  taking  •iot.i  days  to  pay 
the  interest  and  there  being" l)ut  313  work  days  in  a  year,  the 
debtor  finds  himself  -short''  87  days.  This  is  deferred  by 
"credit  note."  But  the  next  turn  of  the  thumbscrews  of  eon- 
traction  finds  him  short  IS  7  days,  which  means  credit  gone 
for  a  chattel-mortgage  substitute. 

The  next  turn  toward  "hard-pan"  finds  the  debtor  "short" 
1287  days.  This  means  a  mortgage  on  cr"erything,  as  well  pres- 
ent as  future. 

The  next  turn  reaches  out  to  "specie  basis"  and  "  resump- 


222  PHILOSOPHY    OF     PRICE. 

tion,"  and  the  court  of  last  resort — the  high  sheriff  (?) — bids 
file  debtor  go!  in  the  name  of  law,  good  order,  and  the 
Christian  teachings  of  the  nineteenth  century,  out  into  God's 
land,  if  he  can  iind  any  that  monopolists  have  not  gobbled  ;  or 
go,  as  the  tramp,  branded  by  law. 

But  of  the  up-turn  to  $2  per  day,  the  "sum  left""  at 
this  price,  he  pays  his  interest  with  200  days'  work,  and  has 
113  left  to  work  for  wife,  babies,  home,  improvement,  with 
something  to  spare  to  pay  the  principal  of  debt. 

But  of  the  np-turn  to  $4  per  day  he  pays  his  interest  with. 
100  days'  work,  and  has  213  left  to  apply  for  God,  home,  and 
humanity. 

This  means  the  debt  honestly  paid,  the  mortgage  canceled, 
hopes  realized,  wife  cheerful,  children  gay,  hearthstone  loves 
briglitened,  familj'  educated,  society  built  up — a  better  citizen — 
a  man." 

I  quote  the  above  from  a  speech  by  the  Hon.  L.  H.  Weller 
of  Iowa.     Comment  is  unnecessary. 

Again,  when  Ioav)  prices  are  paid  for  labor,  the  prices  of 
pi'odncts  are  proportionally  low.  It  is,  therefore,  generally 
supposed  that  the  laborer  can  as  readily  procure  all  needful 
suj>plies  when  labor  is  at  a  low  price,  as  when  it  is  at  a 
liigh  one.  But  the  articles  whose  price  is  diminished  by  the 
lowering  of  labor,  are  the  productions  of  labor ;  and  the  pro- 
ducing classes  suffer  great  injury  from  this  depression  of  both 
their  labor  and  products. 

The  following  illustration  will  exhibit  the  advantage 
of  high  prices  for  labor.  A  man  raises  a  hundred  bales  of  cot- 
ton, sends  them  to  market,  and  receives  three  and  a  half  cents 
l)er  pound.  A  laborer  in  New  York  receives  fifty  cents  a  day 
for  his  labor ;  with  a  days  work  he  can  purchase  fourteen 
pounds  of  cotton.  If  labor  be  at  a  dollar  per  day,  and  cotton 
at  seven  cents  per  pound,  with  a  day's  labor  he  can  purchase 
the  same  quantity.  If  labor  rise  to  a  dollar  and  fifty  cents 
a  day,  and  cotton  to  ten  and  a  half  cents  per  pound,  a  day's 
labor  will  still  purchase  fourteen  pounds  of  cotton.  Thus  far 
we  do  not  ol^serve  the  difference  of  price  to  have  any  influence 
upon  the  ability  of  the  laborer  to  purchase ;  but  we  have  yet 


CONCLUSIONS.  223 

to  notice  the  condition  of  that  class  of  producers  who  raise  the 
cotton  at  the  first  price,  three  and  a  half  cents  per  pound. 
After  paying  for  the  use  or  rent  of  the  plantation  one-half  the 
price  at  which  a  loan  of  money  can  be  obtained,  say  three 
or  four  per  cent,  interest  on  the  cost  of  the  plantation,  they  do 
not  earn  fifty  cents  a  day,  but,  in  fact,  receive  little  or  no  com- 
pensation for  their  labor.  The  same  labor  and  land  are  required 
to  produce  cotton  when  it  brings  three  and  a  half  cents, 
as  when  it  brings  fourteen  cents  per  pound.  Suppose  a  work- 
man in  New  York  to  buy  cotton  at  fourteen  cents  per  pound ; 
a  barrel  of  flour  at  $8  ;  wheat  at  $1.50  per  bushel ;  potatoes  at 
40  cents  ;  brown  sugar  at  10  cents ;  boots  at  $3  a  pair  ;  brown 
sheeting  at  10  cents  per  yard ;  and  good  calico  at  12  cents  per 
yard.  If  labor  falls  to  50  cents  per  day,  and  he  have  full  em- 
ployment, to  be  as  well  off  as  when  labor  was  at  $2  per 
day  he  must  buy  flour  at  $2  per  barrel ;  wheat  at  37 1-2  cents 
per  bushel ;  potatoes  at  10  cents ;  brown  sugar  at  2 1-2  cents 
per  pound  ;  boots  at  T5  cents  per  pair ;  brown  sheeting  at  2  1-2 
cents  per  yard  ;  calico  at  3  cents,  and  everything  else  in  pro- 
portion. Traveling  expenses,  rents  and  taxes  must  be  diminished 
three  quarters.  All  the  necessaries  of  life  must  be  reduced  in 
price  three  quarters,  or  the  laborer  who  is  out  of  debt  will  not 
be  as  well  off  when  labor  is  fifty  cents  per  day,  as  when  it  is  at 
$2  per  day.  But  suppose  one  class  of  the  laborers  to  buy 
at  these  low  prices,  what  will  the  producers  of  wheat,  etc., 
receive  for  their  labor?  The  reason  that  the  laborer  can  buy 
as  much  cotton  when  labor  is  at  fifty  cents  per  day,  as  when  it 
is  at  $2,  is,  tha,t  he  buys  a  fellow-laborer's  products  at  a  price 
which  will  not  pay  a  cent  a  day  for  the  toil  of  jn-oducing  them. 
So,  when  the  prices  of  labor  are  reduced  in  this  ratio,  laborers, 
as  a  body,  are  unable  to  provide  themselves  with  the  necessaries 
of  life,  and  sparingly  live  upon  the  meager  fruits  of  each  others 
toil.  The  reduction  of  the  prices  of  labor  and  products,  conse- 
quent upon  a  scarcity  of  money  aud  a  rise  of  interest,  forces 


224  PHILOSOPEY  OF   PEICE. 

producers  and  merchants  to  suffer  great  losses,  because  the 
diminution  of  the  prices  of  products  does  not  diminish  the 
amount  of  their  debts,  nor  their  legal  obligations  to  pay  them  ; 
while  the  capitalists  who  own  these  debts  will  compel  laborers 
and  owners  of  land  and  products  to  sell  double,  treble,  and 
quadruple  the  quantity  of  these,  to  obtain  money  to  satisfy  the 
debts.  Thus  wealth  passes  with  great  rapidity  into  the  hands  of 
a  few  capitalists.  If  the  merchant  has  bought  goods  at  as  low 
a  price  as  they  can  be  afforded  by  the  manufacturer,  it  is  no 
safeguard  against  loss  by  the  fall  of  goods  in  the  market, 
because  the  market-price  of  the  goods  does  not  depend  upon 
the  labor  necessary  to  their  production,  but  upon  the  ever- 
varying  value  of  the  dollar.  Our  laws  make  the  dollar  the  real 
value,  or  standard  of  payment,  and  producers  and  all  kinds  of 
property  are  controlled  by  its  power. 

The  objection  is  often  urged,  that  to  make  money  plenty 
would  destroy  the  value  of  products.  But  how  would  or  could 
it  destroy  their  value  to  allow  the  needy  to  earn  the  means 
to  purchase  them  ?  Will  not  a  starving  people  buy  products  ? 
Does  anyone  suppose  that  the  people  of  Ireland  would  live 
upion  their  present  scanty  food,  if  their  labor  would  afford 
them  the  means  of  purchasing  more  and  better  ?  Was  there 
ever  a  bad  market  for  products  when  labor  was  receiving  what 
are  called  high  prices,  or  a  good  market  when  labor  was  at  a 
low  price  ?  The  market  is  made  poor  by  the  inability  of  tlie 
laboring  community  to  earn  enough  to  make  purchases.  If 
labor  were  well  paid,  the  market  wo-uld  always  be  good,  and 
the  laborer,  assured  of  a  just  reward,  would  work:  cheerfully. 

Large  production,  at  a  fair  price,  gives  a  better  compensa- 
tion to  producers  than  half  production  at  a  double  price.  The 
families  of  producers  require  as  many  products  for  their  OAvn 
consumption  when  the  crops  are  diminished  one-half,  and  their 
price  is  doubled,  as  when  products  are  abundant.  The  pro- 
ducers cannot  then  spare  a  sufficient  quantity  to  sell  for  their 


CONCLUSIONS.  225 

usual  profits,  even  at  the  increased  price,  and  capital  makes  the 
same  requisition  upon  their  labor  for  rent  or  interest  as  if  their 
crops  were  abundant. 

It  is  a  solemn  truth  that  hard  times  fill  up  alike  our  poor- 
houses  and  jails ;  that  these  periods  of  financial  depression  not 
onlv  brinsr  more  poverty,  but  increase  crime.  It  is  plain  enough 
when  understood. 

When  hard  times  begin  to  press  upon  an  individual,  and 
retrenchment  of  expenses  are  commenced,  the  moral  luxuries 
go  first.  Next  follow  his  intellectual  luxuries ;  lastly  he  cuts 
off  personal  luxuries,  and  gradually  little  comforts  of  life  are 
dropped  one  by  one,  until  the  struggle^  for  the  bare  necessities 
of  life  takes  the  place  of  all.  The  moral,  social  and  intellectual 
conditions  are  sacrificed  to  the  physical. 

From  this  condition  come  poverty,  helplessness  and  crime 
from  despair.  When,  for  any  reason  this  condition  is  bettered, 
the  same  route  is  traveled  back,  starting  through  individual 
comforts,  then  to  intellectual  luxuries,  and  finally  to  moral 
obligations  and  a  higher  life. 

"Talk  to  the  winds  and  reason  with  despair. 
But  tell  not  Misery's  sons  that  life  is  fair." 

History  proves'  these  propositions  true,  and  the  experi- 
ences of  an  ordinary  lifetime  confirm  them.. 

I  would  not  be  understood  that  the  poor  are  wanting  in 
these  virtues,  or  that  they  are  debarred  from  acquiring  them ; 
but  I  do  say  that  poverty  and  deprivations  are  not  promoters 
of  moral  and  social  advancement — that  the  over-worked,  ill- 
fed,  distressed  individual,  whose  whole  time  is  occupied  in 
''bread  winning"  is  in  no  condition  to  discuss,  much  less  to 
participate  in  the  higher  moral  and  social  attainments.  Life, 
to  them,  is  but  a  continual  fight  to  supply  the  demands  of 
nature,  with  no  place  for  elevating  or  refining  sentiments.  But 
in  direct  ratio  as  the  battle  for  life  is  lessened,  and  physical 
energies  are  relieved  from  the  constant  strain  of  production,  the 


226  PHILOSOPHY    OF    PKICE. 

molding  influences  of  civilization  are  seen  to  find  lodgment. 
We  are  all  creatm'es  of  circumstances.  Our  welfare  depends 
upon  the  rules  of  society,  or  rather  the  customs  of  our  asso- 
ciates, the  regulations  and  restrictions  of  law,  and  our  own 
ability  to  interpret  them.  The  importance,  therefore,  of  salu- 
tary laws,  and  their  proper  adaptation  to  the  circumstances  and 
conditions  of  those  whose  condiict  is  sought  to  be  directed,  is 
of  the  first  consideration.  While  Governments  do  not  point 
out  to  each  individual  the  course  he  shall  pursue,  they  should 
make  such  general  restrictions  that  all  might  fully  and  equally 
act  within  their  limits.  These  restrictions,  in  a  government 
like  our  own  especially,  are  for  the  greatest  good  to  the  great- 
est number. 

The  great  bulk  of  our  people  are  producers.  Almost  sixty 
per  cent,  are  wage-workers.  The  proportion  of  rich  to  poor  is 
as  6  to  9-i.  This  being  true,  then  our  laws  should  be  so  framed 
as  to  benefit  the  poor  as  against  the  rich,  to  protect  the  weak 
against  the  strong.  That  this  is  not  the  ease,  that  our  laws  are 
not  so  constructed,  we  have  but  to  glance  about  us  for  proof. 
We  can  discern  at  once  that  something  is  at  fault  with  our 
economic  system.  That  fault,  in  my  opinion,  is  due  to  a  misap- 
prehension of  money  functions,  or  to  a  willful  mismanagement 
of  our  circulating  medium.  The  great  difference  between  the 
extremes  of  poverty  and  prosperity  in  this  country  is  wholly 
due  to  the  condition  of  our  currency.  What  is  commonly 
called  "good  times"  are  periods  when  the  quantity  of  nioney 
is  rapidly  increasing.  Bad  times  come  when  the  quantity  is 
diminished  or  at  a  standstill,  or  not  increasing  as  fast  as  the 
population  and  needs  of  business  require. 

The  history  of  civilization  shows  that  the  fall  of  Rome 
and  the  subsequent  elimination  of  nearly  all  the  civilizing  in- 
fluences were  due  almost  entirely  to  the  failure  of  the  mines 
from  which  it  derived  its  currency,  paper  substitutes  being 
then  unknown ;  that  the  first  glimmer  of  returning  hope  was 


CONXLUSIONS.  227 

co-incident  with  the  discovery  of  paper  money,  which,  after 
several  evohitions,  was  put  in  the  form  of  bank  paper  for  the 
first  time  in  Sweden,  in  165S.  From  that  day  to  tlie  present, 
the  nation  using  the  cheapest  unit  as  a  standard  of  payment, 
has  prospered  the  greatest. 

A  standard  of  value  is  like  the  money  of  the  world,  an 
impossible  something,  which  is  made  use  of  by  demagogues  to 
frighten  or  mislead  the  people.  If  we  are  to  have  either  silver 
c.r  gold  as  the  standard  of  payment,  let  us  by  all  means  take 
f  ilver.  All  countries  prosper  where  debts  must  be  paid  in  the 
cheapest  standard  of  payment.  This  means  dear  labor,  dea^ 
productions,  and  cheap  payments. 

The  curse  of  all  monetary  systems,  at  the  present  time,  Is 
caste.  There  is  in  every  nation  a  money  unit  for  the  rich,  and 
a  money  unit  for  the  poor.  We  have  it.  England,  France, 
Germany  and  other  Xations  have  it.  Why  is  copper,  nickel, 
and  all  subsidiary  cola  nol;  a  full  legal  tender?  Not  for  the 
reason  advanced  by  many,  that  in  payment  of  debts  men 
might  misuse  t!xc  privilega  and  load  down  the  creditor  M'itli 
large  amounts  of  this  co!n.  No ;  far  from  that  being  the  true 
answer.  It  is  because  a  large  majority  of  the  people  are  poor 
and  can  use  but  small  amounts  at  best.  Why  is  silver  used  in 
India  ?  CjcausG  no  gold  coin  could  be  made  of  small  enough 
value  to  even  pay  for  labor;  it  is  so  cheap.  Gold  is  found  in 
use  with  diamonds,  silks,  satins,  palatial  residences,  etc.,  while 
the  use  of  silver  i-,  discovered  among  rags,  hovels,  want  and 
wretchedncGs.  The  United  States  is  one  of  the  greatest  silver 
producing  nations  in  the  world.  As  one  of  our  precious  met- 
jds,  it  should  bo  U32d  as  money  to  a  much  greater  extent  than 
gold.  By  our  laws,  but  two  million  dollars  each  month  is  per- 
mitted to  be  coined.  Silver,  being  one  of  our  staple  products, 
if  not  vranted  at  home,  goes  abroad  like  wheat  or  meat,  but 
witli  a  f-ir  different  purpose.  Other  products  of  export  are 
sent  abroad  to  be  consumed,  while  silver  is  bought  from  us  to 


228  PHILOSOPHY    OF    PRICE. 

be  used  principally  as  money.  This  silver  goes  to  those  nations 
where  silver  is  used  as  the  circulating  medium,  and  assists  in 
building  up  industries  to  compete  with  our  own.  Large 
amounts  of  our  silver  has  found  its  way  to  India.  By  the  use 
of  it,  India  has  so  improved  her  condition  in  regard  to  produc- 
tion, that  to-day  wheat  can  ])e  laid  down,  duty  paid,  in  New- 
York,  from  that  country,  cheaper  than  from  Dakota.  A  con- 
tinuance of  this  will  not  only  deprive  us  of  our  wheat  market, 
but  wool  as  well ;  and  the  solemn  fact  presents  itself  to  the 
minds  of  everv  one  that  the  silver  usino-  countries  do  now,  and 
Avill  in  the  future,  compete  successfully  \^ith  any  and  all 
nations  using  gold. 

"When  we  attempt  to  cry  down  the  value  of  silver,  we  are 
injuring  one  of  the  large  factors  emj)loyed  in  the  accumulation 
of  our  own  wealth.  Besides  this,  it  is  a  downright  injury  to 
all  other  forms  of  wealth  below  it,  and  a  benefit  to  all  forms 
above  it.  Thus  we  see  that  the  depreciation  of  silver  depre- 
ciates every  other  product  but  gold,  as  gold  is  the  only  produc- 
tion more  valuable  than  silver  intrinsically. 

Just  so  long  as  we  undertake  to  put  into  practice  that 
worst  of  all  ideas,  a  standard  of  values,  just  so  long  will  the 
higher  valued  products  measure  the  lower.  The  large  pocket 
book  governs  the  smaller,  and  the  rich  will  rule  the  poor. 

At  the  present  time  there  is  much  said  and  written  about 
tlie  shrinkage  of  values.  There  has  been  really  no  shrinkage 
of  values,  but  there  has  l)een  an  increase  in  the  measure  by 
which  values  were  estimated.  Some  well-disposed,  but  extremely 
ignorant  persons  have  introduced  a  bill  in  Congress  to  establish 
a  uniform  standard  of  value,  hoping  thereby  to  avoid  these  fluc- 
tuations. The  Pope's  bull  against  the  comet  was  sound  logic  com- 
pared to  this.  In  doing  so,  legislation  seeks  to  establish  an 
utter  impossibility.  As  I  have  said  repeatedly  before,  there 
can  be  no  such  thing  as  a  standard  of  value.  That,  with  the 
markets  of  the  world,  the  money  of  the  world,  and  the  philos- 


CONCLUSIONS.  229 

opher's  stone,  all  belong  in  the  same  category  of  ancient  fables. 
Coins  are  not  standards  of  value,  but  standards  of  payment. 
The  only  measure  of  value  is  the  money  of  account,  that 
abstract  thing,  the  dollar,  of  which  we  talk  so  much.  Value 
is  an  abstract,  intangible  something  that  can  not  be  measured 
b}'  a  concrete  tangible  something  any  more  than  an  idea  can  be 
measured  by  a  quart  cup,  or  a  sentiment  by  a  foot  rule.  The 
difterence  b^^tween  a  standard  of  payment  and  a  standard  of 
value  is  tli 

A  standard  of  payment  is  a  certain  legally  authorized 
amount  of  specified  commodities  which  are  the  basis  of  all 
debts  or  agreements,  and  are  received  in  liquidation  of  the 
same.  The  standard  of  payment  in  this  nation  is  a  specified 
number  of  grains  of  gold  or  silver. 

A  standard  of  value  is  a  commodity  value,  ascertained  bv 
the  relation  which  the  standard  of  payments  bear  to  it  and  all 
other  things.  It  is  an  assumption,  having  no  existence  either 
in  logic  or  fact.  The  only  manner  in  which  value  is  ascer- 
tained is  by  a  comparison  with  the  standard  of  payment.  The 
word,  standard,  means  stable,  solid,  unchanging.  There  never 
was  a  commodity  of  value  in  the  world  that  was  not  constantly 
changing  as  its  conditions  to  other  commodities  changed.  The 
standard  of  payment  cannot  be  a  standard  of  value,  because 
the  value  of  that  standard  has  always  been,  is,  and  always  will 
be,  fluctuating.  The  value  depends  upon  its  amount  and  the 
demand. 

Value  is  an  abstract  idea,  like  goodness,  idleness,  labor  and 
the  dollar.  Who  ever  saw  a  dav's  work  or  handled  a  dollar? 
Wlio  ever  bought  a  pound  of  goodness,  or  a  foot  of  idleness  ? 
To  have  a  standard  of  value  it  would  be  necessarv  to  find  some 
product  that  never  varies  in  value.  AV^here  can  it  be  found  ? 
"We  have  a  standard  of  length  in  the  twelve  inches  to  the  foot; 
of  weight,  in  the  sixteen  ounces  to  the  pound ;  of  time,  in  the 
sixty  seconds  in  a  minute.     "Wlio   ever   purchased   either  of 


230  PHILOSOPHY    OF    PRICE. 

these  ?  and  yet,  they  are  real  products  as  compared  to  the  idea 
of  a  standard  of  value.  We  have  a  standard  for  length  in  the 
foot.  It  will  measure  distance,  it  will  measure  timber,  cloth, 
etc.  The  pound  weight  will  measure  gold  as  well  as  wheat. 
The  gallon  will  measure  water  as  well  as  wine. 

But  in  the  standard  of  the  measure  of  value  there  must 
be  something  found  that  can  be  applied,  at  any  and  all  times, 
to  any  and  all  substances  to  determine  their  value  with  unvary- 
ing minuteness.  Will  a  certain  number  of  grains  of  gold  or 
silver  determine  the  value  of  the  cargo  of  lumber,  the  cargo 
of  wheat,  or  the  cargo  of  molasses  ?  How  can  23  22-100  grains 
of  gold  do  all  this  'i  How  is  it  applied  ?  If  this  amount  of 
gold  should  become  more  valuable  from  scarcity,  as  it  is  now, 
the  measure  would  be  too  large.  If  it  should  shrink  in  value, 
the  measure  would  be  too  small.  In  fact,  as  before  stated, 
there  is  no  standard  of  value.  Money  is  simply  a  standard  of 
payment.  Value  itself  cannot  be  measured ;  it  can  only  be 
determined  approximately  by  comparison.  Quality  cannot  be 
measured  by  quantity.  The  abstract  cannot  be  obtained  by 
applying  the  concrete.  There  may  be  different  degrees  of 
quality,  but  not  an  increase  or  decrease  of  amount. 

After  all,  the  two  great  objects  of  law  are  the  protection 
of  life  and  the  proper  distribution  of  wealth.  In  fact,  a  just 
distribution  of  wealth  itself  would  be  one  great  factor  in  the 
])rotection  of  life  and  the  prevention  of  crime.  The  lust  for 
money  is  the  foundation  of  and  incentive  to  much  of  the  crime 
committed,  for  which  the  human  family  is  guilty.  One  potent 
agent  in  the  equalization  of  wealth  is  taxation.  A  graduated 
income  tax,  increasing  with  the  wealth  of  the  individual,  would 
not  oidy  be  just,  but  would  do  much  toward  bringing  about 
this  result.  When  a  man  ])ecomes  able  to  command  the  power 
of  one  hundred  thousand  dollars  in  wealth,  he  at  once  becomes 
a  menace  to  the  state  and  the  just  application  of  law.  This  is 
true  in  the  nature  of  things.     His  influence,  in  so  far  as  hig. 


CONCLUSIONS.  231 

money  goes,  is  equal  to,  and  by  virtue  of  its  concentration, 
miich  greater  than  that  of  the  325  pauper  neighbors  that  his 
accumulation  of  wealth  necessarily  brings  into  existence.  Very 
few  men  are  punished  for  crime  who  are  worth  this  sum  of 
money. 

jS'ow,  if  we  should  abolish  all  internal  revenues  ;  limit 
duties  or  customs  to  an  amount  that  would  protect  lalwr  and 
the  products  of  labor  from  unfavorable  competition  on  our 
own  soil ;  then  put  such  an  income  tax  on  the  production  of 
wealth  as  would  make  it  unprofitable  to  be  worth  more  than 
$100,000,  I  think  the  question  of  the  just  distribution  of 
w^ealth  would  be  much  less  diflicult  of  solution.  Let  the  in- 
come tax  be  so  arranged  that  all  the  profit  of  business  above 
the  legitimate  earnings  of  $100,000,  be  paid  over  to  the  na- 
tional Treasury.  Then  millionaires  would  soon  cease  to  curse 
our  land. 

There  is  nothing  more  disastrous  to  the  nation  than  larore 
accumulations  of  wealth.  I  do  not  wish  to  be  understood  as 
making  war  on  capital,  or  not  upholding  a  just  emulation  in 
the  acquirement  of  wealth,  but  I  do  wish  to  convey  this — 
that  the  laws  of  distribution  should  take  from  money  its  power 
of  attraction  to  other  forms  of  wealth ;  that  is,  I  would  elim- 
inate the  idea  from  the  minds  of  men  that  "  it  takes  money  to 
make  money,"  as  they  now  express  it.  I  would  substitute 
instead  the  plain  fact  that  it  takes  labor  to  make  mone}-.  And 
I  would  so  frame  our  economic  laws  that  when  men  labor — no 
matter  if  they  are  foolish  and  ignorant — the  result  would  show 
that  labor  did  brino;  a  reward.  If  after  the  reward  was  earned 
men  squandered  it,  the  assumption  should  not  follow  that  by 
reason  of  this  they  should  not  be  permitted  to  earn  it.  I  would 
not  bring  in  the  fact  of  a  man's  incapacity  to  hoard  money  as 
the  reason  for  not  giving  him  the  opportunity  to  earn  it. 

"When  one  man  goes  to  his  grave  worth  ten  million  dol- 
lars, and  his  neighbor,  who  has  been   equally  industrious,  is 


232  PHiLosoPHr  of  price. 

buried  at  the  public  expense,  it  shows  on  its  face  an  unjust  dis- 
tribution of  the  fruits  of  labor.  I  do  not  subscribe  to  the 
doctrine  that  what  one  man  gains  another  loses,  because  we  are 
producing  wealth  all  the  time  through  the  medium  of  invisible 
capital.  This  would  be  true,  however,  if  wealth  was  stationary. 
But  I  do  claim  when  a  man  produces  wealth  through  his  own 
labor,  the  economic  laws  of  the  land  should  be  so  framed  that 
lie  may  retain  peaceable  possession  of  it.  As  Thomas  Paine 
says  in  liis  Rights  of  Man :  "'When  the  old  men  go  to  the 
poorhouse,  and  the  young  men  to  prison,  something  is  wrong 
with  the  economic  system  of  the  nation." 

At  the  present  time  there  is  a  general  desire  among  all 
nations,  to  find  some  remedy  for  the  increasing  dissatisfaction 
so  manifest  with  the  laboring  classes.  Opinions  upon  this  sub- 
ject are  widely  at  variance.  Neither  employer  nor  employe 
can  answer  the  question  satisfactorily,  even  to  themselves.  The 
Knights  of  Labor,  that  grand  organization  for  good,  are  not 
quite  a  unit  as  to  the  real  difficulty.  This  Brotherhood,  so 
well  disciplined,  so  powerful,  backed  up  as  it  is  with  a  sense  of 
justice  and  right  in  its  cause,  will  fall  to  pieces,  and  that  soon, 
if  it  does  not  at  once  state  to  the  world  some  one  great  remedy 
for  the  complaints  made.  The  long  list  of  demands  shown  in 
their  platform,  will  require  years  to  legislate  upon  singly.  If 
these  charges  are  true,  they  are  simply  ulcers  upon  our  body 
politic.  To  treat  them  one  at  a  time  would  be  not  only  bad 
practice,  but  doubtless  prove  fatal.  The  proper  course  points 
to  a  thoi-ough  cleansing  of  the  body,  a  powerful,  searching 
purijBer,  that  in  its  operation  would  rid  the  system  of  all  this 
poison,  and  drive  out  all  extraneous  matter.  Is  there  not  one 
great  panacea  that  will,  in  the  proper  course  of  its  action,  rem- 
edy the  larger  part  of  these  evils  ?  I  think  there  is.  Let  us 
make  the  search.  In  previous  chapters  I  have  pointed  out  the 
causes  for  all  these  troubles.  I  have  shown  the  attitude  of 
Capital   and  Labor.     I  have  endeavored  to  treat  the  matter 


COXCLUSIOMS.  233 

fairly,  to  give  facts  and  figures,  as  well  as  the  opinions  of 
others  to  sustain  my  position. 

The  remedy,  in  my  judgment,  does  not  lie  in  labor  laws, 
tariffs,  arbitration,  poor  laws,  or  anything  of  like  character.  I 
believe  they  will  simply  act  as  an  irritant,  and  in  the  end  do 
more  harm  than  good.  But  I  do  believe  that  relief  can  be 
found  in  a  proper  regulation  of  our  domestic  currency.  The 
point  in  the  whole  matter  is  money;  the  point  on  which  it 
all  turns  is  money ;  and  the  object  of  all  this  strife  is  money. 
This  being  true,  why  not  use  that  one  factor  to  correct  what  it 
has  misplaced  ?  Its  possession  or  non-possession  is  the  differ- 
ence between  rich  and  poor — between  starvation  and  plenty. 
Every  proposition  in  this  book,  every  quotation  and  every 
argument,  points  out  the  one  complete  and  final  remedy — an 
increase  in  the  domestic  currency  of  our  country.  I  have 
proven  it  by  statistics,  by  the  writings  of  the  most  eminent 
economists  from  the  time  of  Aristotle  to  the  present ;  by  the 
condition  of  our  owm  countiy  now,  as  compared  M'ith  other 
dates ;  in  every  manner  and  by  all  means  by  which  a  proposi- 
tion of  this  character  can  be  substantiated,  that  a  decreasing 
volum.e  of  money  is  a  curse,  while  an  increasing  volume  is  a 
blessing.  "Wliile  it  may  not  be  true  that  the  greater  the  amount 
of  currency,  the  less  earnest  will  be  the  demand,  it  is  a 
fact  that  the  less  the  amount  the  more  eager  each  one  is  to 
obtain  their  full  share  or  more. 

When  the  amount  of  any  commodity  is  small  or  diminish- 
ing, every  one  interested  in  its  use  becomes  at  once  anxious  for 
present  and  future  wants.  If  a  prime  article  of  necessity,  it 
shows  this  anxiety  in  its  higher  commercial  value.  But  if  the 
same  is  in  abundance,  it  becomes  cheap,  because  consumers, 
aware  of  its  abundance,  are  not  in  the  least  worried  about 
present  or  future  supplies.  Just  so  with  the  volume  of  money. 
The  one  primal  function  of  money  which  measures  value,  and 
the  other  bestowed  function  which  pays  debts,  are  both  gov- 


234  PHILOSOPHT    OF    PRICE. 

erned  by  the  same  rule.  They  can  both  be  increased  or 
decreased  in  their  activity  and  power.  Tlie  same  conditions 
that  affect  the  price  of  commodities,  govern  the  action  of 
money.  Thus,  measures  of  value  do  not  of  themselves  per- 
form the  function  of  measurement,  but  are  bought  with,  the 
products  of  labor,  or  labor  itself,  for  the  purpose  of  being  held 
to  measure  the  value  of  some  other  product  more  desirable  to 
the  holder  than  the  product  which  he  sold  to  obtain  the  meas- 
ures. For  example,  the  farmer  buys  these  measures  with 
wheat,  in  order  to  sell  them  for  a  carriage.  Of  themselves, 
they  are  incapable  of  action,  but  are  sought  for  in  order  that 
this  particular  function  may  be  used,  when  occasion  may 
require.  Just  so  with  the  debt-paying  power ;  it  is  only  put 
in  force  when  debts  are  to  be  paid,  and  as  every  business  trans- 
action necessitates  an  obligation,  this  function  is  continually 
being  used.  Now,  with  plenty  of  these  measures  of  value  in 
sight,  people  would  not  be  anxious  about  tl:^eir  ability  to  obtain 
them  when  wanted.  Equally  true  with  the  debt  paying  func- 
tion ;  with  an  abundance  on  hand  which  could  be  had  in  ex 
change  for  a  reasonable  amount  of  labor,  no  one  M'ould  be 
troubled. 

The  more  products  to  measure,  the  more  measures  would 
be  necessary.  Also,  the  more  business  transactions  to  complete, 
the  more  debt-paying  factors  would  be  needed*  An  increase  of 
production  or  of  business  not  only  calls  for  more  money  for 
the  above  reasons,  but  urgently  demands  it,  A  less  amount  of 
products  or  business  transactions  would  require  less  currency. 
It  is  a  settled  fact  among  economists  of  all  nations  that  money 
becomes  more  valuable  at  some  times  than  at  others,  that  it 
increases  and  decreases  in  value  under  certain  conditions.  This 
change  in  value  is  only  obtained  by  comparing  it  with  lal)or 
and  its  products.  This  comparison  has  brought  out  tlie  fact 
that  money  is  more  valuable  when  its  quantity  is  decreasing  or 
remaining  stationary,  while  the  demand  for  it  is  incrcasinsr. 


coNCLrsioNs.  235 

Also,  this  rule  invariably  shows  labor  and  its  products  in 
conjunction  to  bring  lower  prices.  The  history  of  the  financial 
world  proves  this  to  be  true.  Continuing  to  make  money 
less  in  amount,  would  as  steadily  make  it  more  valuable, 
and,  following  out  the  rule,  would  lower  the  price  of  labor 
and  all  its  products.  Eliminate  all  money,  and  commercial 
values  would  cease  altogether.  Labor  value  or  barter  would 
then  take  its  place.  On  the  other  hand,  increase  the  amount 
of  domestic  currency,  and  this  measure  will  decrease  in  value 
and  at  the  same  time  increase  the  money  value  of  all  labor  and 
production.  Continue  this  increase  indefinitely,  and  in  the  end 
money  value  will  become  an  absurdity  and  cease,  which  would, 
bring  about  the  same  result,  a  resort  to  barter  or  labor  exchano-e. 
Here  we  find  an  example  of  arriving  at  the  same  point  from 
opposite  directions.  This  would  seem  to  imply  a  middle 
ground,  alike  honorable  and  just  to  both  contestants. 

It  is  evident  that  the  quantity  of  domestic  currency  alone 
is  master  of  the  situation,  and  is  the  only  remedy  tlmt  can  be 
applied.  This  never  can  be  accomplished  by  granting  the 
power  to  issue  currency  to  corporations,  or  trust  to  the  judg- 
ment of  men  in  high  positions.  It  must  be  a  per  capita 
amount,  increasing  with  population.  Make  the  amount  suffi- 
cient to  place  capital  and  labor  on  the  same  footing.  In  other 
words,  make  dollars  as  plenty  as  days'  work,  and  confine  them 
to  the  same  power  of  accumulation. 

There  is  but  one  way  to  bring  about  this  result,  and  that 
is  through  the  increase  of  our  domestic  currency  to  that  extent 
that  its  very  abundance  will  make  it  less  valuable.  If,  by  acci- 
dent or  design,  the  laborer  fails  to  perform  the  days'  toil,  it  is 
lost  to  him  forever.  I  would  have  money  so  constituted  that 
it  would  bring  in  no  remuneration  unless  actively  engaged  in 
exchanges.  That  can  be  done  by  making  it  so  plenty  that  the 
surplus  beyond  that  actually  in  use  will  be  the  same  as  so  much 
produce  unsold.     I  do  not  concur  in  the  idea  of  eliminating 


2S6  PHILOSOrHT    OF    PEICE. 

interest  in  financial  matters.  Men  do  not  object  to  the  pay- 
ment of  fair  interest,  but  they  do  rebel  against  returning  a 
more  valuable  dollar  than  they  borrowed. 

Increase  the  volume  of  domestic  currency  to  such  an  ex- 
tent that  a  dollar  will  sell  for  a  just  r.nd  reasonable  amount  of 
labor  or  its  products,  and  that  point  in  our  economic  affairs 
will  have  been  reached  where  tramps  will  be  seen  no  more, 
labor  strikes  will  cease,  and  the  smile  of  happiness  will  once 
more  be  seen  on  the  face  of  the  toiler.  We  shall  then  be 
standing  on  that  honorable  middle  ground  which  is  so  necessary 
to  the  prosperity  and  comfort  of  all  nations. 

Make  this  amount,  as  I  have  said  before,  mandatorv,  so 
much  per  capita,  and  to  increase  each  year  with  the  increase 
of  population ;  then  prices  would  fluctuate  only  from  the  effect 
of  supply  and  demand,  which  would  soon  regulate  itself. 

"With  this  arrangement  banks  of  issue  would  be  abolished, 
and  our  domestic  currency  come  to  us  direct  from  the  Govern- 
ment. 

Finally,  in  conclusion,  repeal  the  internal  revenue  tax. 
Enact  a  vigorous  income-tax  law,  increasing  with  the  amount 
of  income.  Reduce  the  tariff  to  a  revenue  basis,  and  give 
labor  all  the  protection  which  that  would  afford.  At  the  same 
time  issue  gold  and  silver  certificates,  to  which  add  greenback 
paper  money,  each  and  all  a  full  legal  tender  for  all  debts,  pub- 
lic and  private,  to  the  full  amount  of  $50  per  capita  of  popula- 
tion, that  amount  to  increase  as  population  increases.  This 
would,  in  my  judgment,  put  labor  and  capital  on  nearly  an 
equal  footing,  and  bring  prosperity  and  happiness  to  the  people 
of  this  nation. 


239 


APPENDIX 


LABOE. 

A    LECTURE    DELIVERED    BY   N.    A.    DUXXING    AT    THE     FARMER's 
INSTITUTE,    HELD   AT   MASON,    MICH.,    FEB,    11,    1SS7. 

The  question  of  Labor  which  I  shall  attempt  to  discuss  at 
this  time,  is  older  than  the  universe,  as  far-reaching  as  liuman- 
itv,  and  as  little  understood  as  the  most  marvelous  works  of 
God.  It  has  occupied  the  mind  of  man  since  man  was  created, 
and  will  continue  to  demand  recognition  until  heaven  and 
earth  shall  pass  away.  The  idea  of  labor  at  the  present  time  is 
associated  with  but  a  portion  or  class  of  our  people — those  who 
are  compelled  to  work  for  the  necessities  and  comforts  of  life, 
and  those  who,  for  other  reasons,  choose  to  do  so.  It  represents 
an  undesirable  condition  of  existence  from  which  all  humanity 
seeks  to  be  freed — either  at  once,  ox  when  some  cherished  pur- 
pose has  been  accomplished.  The  man  or  woman  does  not  live 
who  desires  to  labor  every  day,  in  ever}'  year,  of  their  whole 


240  PHILOSOPHY    OF    PP.ICE. 

sojourn  on  eartli.  Such  desire  would  be  unnatural,  a  sin 
against  the  future  and  a  libel  upon  the  past.  Nine-tenths  of 
the  labor  performed  at  the  present  time  is  done  with  the  idea 
that  this  hard  labor  and  toil  will  bring  about  future  ease  and 
comfort.  Those  who  can  live  without  labor,  or,  who  can  labor 
when  they  so  elect,  are  envied  these  privileges  by  their  less 
fortunate  associates.  This  envy,  this  desire  for  like  situation, 
lias  led  to  war,  bloodshed,  riot  and  ruin.  It  has  been  the  fruit- 
ful source  of  the  greater  part  of  the  misery  and  woe  which  have 
overtaken  mankind  since  the  beginning  of  the  race. 

If  the  present  differences  in  the  human  family,  regarding 
this  question,  were  intended  in  the  plan  of  creation,  if  a  portion 
were  to  toil  at  pain  and  sorrow  that  others  might  live  in  idle- 
ness and  pleasure,  then  it  is  the  will  of  God,  and  we  should  sub- 
mit. But,  if  these  differences  were  not  considered  in  the  great 
scheme  of  humanity,  they  are  among  us  through  the  perversion 
of  natural  laws,  and  our  duty  to  each  other,  as  well  as  the  obli- 
gation we  owe  our  Creator,  demands,  aHke,  they  should  be 
eliminated. 

"  In  the  sweat  of  thy  face  shalt  thou  eat  bread,"  declared 
an  outraged  Jehovah !  Did  that  apply  to  only  a  portion  of  the 
human  beings  who  were  destined  to  people  this  earth  ?  Or, 
was  not  the  entire  human  family,  from  Adam  to  the  babe  born 
but  yesterday,  included  in  this  declaration?  Common  sense  and 
a  fair  interpretation  of  the  intent  of  Providence  would  -answer 
that  it  was  a  condition  put  upon  the  race  without  exception — 
that  none  bearing  the  human  form  was  exempt  from  its  obli- 
gations. This  fiat  demanded  that  all  should  support  their 
bodily  natures  through  Nature's  own  exertion — Labor. 

This  was  the  primitive  condition  of  labor ;  it  knew  no  class, 
it  recognized  no  exceptions,  it  made  no  distinction.  Labor  and 
humanity  started  out  together,  hand  in  hand,  to  fight  the  great 
battle  of  life,  each  l^eing  dependent  on  the  other  and  both 
conscious  of  tlie  will  of  its  creator.     Since  that  time,  who  can 


•     APPENDIX.  241 

mark  the  changes,  who  can  portray  the  vicissitudes  through 
which  botli  have  passed  ?  Noah  and  the  deluge ;  xVbrani  and 
his  offering ;  Solomon  and  his  wisdom  ;  Christ  and  Mount  Cal- 
vary ;  the  splendor  of  Rome  ;  the  horrors  of  the  Dark  Ages ; 
Martin  Luther  and  the  Reformation  ;  King  John  and  the 
Magna  Charter  ;  Columbus  and  the  Discovery  of  America ; 
the  war  of  the  Revolution,  and  the  founding  of  our  own  great 
nation — through  all  these  human  nature  remains  the  same, 
dependent  now  upon  labor  as  in  the  primal  hour  of  its  exist- 
ence. But  the  conditions  under  which  this  relationship  exists 
have  undergone  a  wonderful  change.  Then  it  was  a  companion 
of  labor,  a  sharer  in  its  joys  and  sorrows ;  now  it  commands, 
it  coerces,  in  a  word  it  has  become  the  master.  What  has  pro- 
duced this  change,  and  how  to  better  the  situation,  is  the  Alpha 
and  Omega  of  the  labor  question. 

In  the  primitive  state  of  our  race,  men  labored,  simply  for 
personal  or  family  wants ;  there  was  neither  commerce  nor 
exchanges.  Each  produced  what  would  satisfy,  and  each 
enjoyed  the  full  benefits  of  his  labor.  "We  style  tliese  people 
barbarians,  and  shudder  at  the  thought.  Why  ?  Because  they 
could  not  read  or  write  ?  or,  wear  diamonds  and  silks  ?  or,  get 
drunk  and  swear  in  five  or  six  different  languages  ?  Are  these 
among  the  reasons  ?  If  not,  what  are  they  ?  A  few  things  were 
true,  however,  of  Ijarbarism,  If  a  man  made  a  coat,  it  was  his ; 
he  was  not  obliged  to  sell  it  to  pay  interest,  or  hide  it  from  the 
tax-collector.  If  he  planted  a  field,  he  was  not  compelled  to 
eat  the  refuse  and  sell  the  best  to  pay  rent,  or  make  a  payment 
on  the  mortgage.  If  they  were  without  schools,  churches,  and 
railroads,  it  is  no  less  a  fact  they  were  wanting  in  prisons, 
poor-houses  and  tramps.  They  are  called  cruel,  blood-thirsty, 
and  possessing  none  of  the  finer  sensibilities  which  mark  the 
progress  of  civilization — that  their  hopes  in  a  future  life  were 
blasted  by  their  condition. 

How  long  since  this  great  nation,  the  most  civilized  on 


242  PHILOSOPHY    or    PEICE. 

earth,  was  plunged  in  fraternal  strife,  where  brother  sought  the 
blood  of  brother,  and  friend  the  life  of  friend  1 

Even  to-day  the  whole  earth  is  bristling  with  bayonets 
and  rumors  of  war  are  heard  at  every  turn.  Beside,  who  would 
not  rather  stand  in  the  place  of  an  ignorant  barbarian  in  the 
Day  of  Judgment,  than  a  civilized  hypocrite  ?  Pope  says,  "All 
nature's  difference  makes  all  nature's  peace."  That  may  be 
true  in  nature ;  I  doubt  if  it  is  in  man.  If  civilization  could  be, 
as  no  doubt  it  was  intended,  a  blessing  to  all  alike,  it  would  be 
pleasant  to  contemplate,  but  when  we  see  its  advantages  granted 
to  the  few  and  witheld  from  the  many,  there  do  come  up  feel- 
ings of  doubt  and  disappointment.  It  must  be  remembered, 
tliat  a  people  can  not  be  better  taught  than  fed ;  that  constant 
physical  exertion  in  production,  is  not  only  a  hindrance  but,  in 
a  majority  of  cases,  a  positive  check  to  moral  and  social  culture. 
The  laborer,  by  reason  of  his  being  a  laborer,  is  denied  by  the 
logic  of  events  to  share  in  this  higher  civilization. 

The  condition  of  the  laborer  not  being  bettered,  must  as  a 
natural  sequence  become  worse ;  and  society  to-day  presents 
the  melancholy  spectacle  of  a  small  portion  of  our  ■  people 
climbing  higher  and  the  greater  portion  going  lower  on  the 
social  ladder.  This  is  not  all ;  the  whole  fabric  of  civilization, 
all  its  advantages,  all  its  various  adjuncts,  all  things  that  in  any 
manner  contribute  toward  progress  and  higher  life,  are  the  di- 
rect results  of  labor.  Kothing  but  its  constant  efforts  produced 
it,  and  nothing  but  its  continued  efforts  will  maintain  it.  Labor 
and  that  alone  can  support  wliat  it  lias  brought  into  existence. 
It  can  not  be  ignored  ;  the  time  has  come  when  it  must  and 
will  be  heard.  It  stands  to-day  on  the  threshold  of  future 
progress  and  further  advancement,  and  sternly  demands  of  us, 
of  you  and  me,  "Shall  my  efforts  in  time  to  come  be  free  or 
enforced  ?"  The  fate  of  the  civilized  world  depends  upon  the 
answer.     Tlic  people  of  this  generation  must  decide,  and  the 


APPENDIX.  24:3 

Nineteentli  Century  must  declare  it.  We  who  enjoy  great 
privileges  are  no  less  burdened  with  great  responsibilities.  Let 
us  consider  well  how  we  discharge  them.  Labor  must  be  free 
or  enforced.  The  usual  picture  of  enforced  labor  shows  a 
fierce  looking:  white  man  drivina;  forward  in  their  work  a  num- 
ber  of  miserable  looking  black  men.  Happy,  indeed,  the  world 
would  be  if  it  ended  here.  It  does  not.  It  represents  the  fair- 
est part.  The  reverse  of  the  picture  presents  to  our  view  the 
great  struggling  mass  of  humanity,  urged  on  by  some  unseen 
power,  M^orking,  slaving,  toiling  day  by  day,  bringing  into 
existence  untold  treasures  of  wealth,  but  are  permitted  to  enjoy 
but  a  mere  per  cent. 

Economists  all  agree  that  labor  is  the  sole  producer  of 
wealth.  If  this  proposition  is  true,  why  does  not  the  producer 
of  this  wealth  possess  it  after  production  ?  What  intervening 
cause  steps  in  between  the  producer  and  this  wealth  and 
prevents  his  owning  and  enjoying  what  his  brain  and  brawn 
have  created  ?  Xo  one  seems  to  question  the  right  or  justice  of 
each  individual  enjoying  the  fruits  of  his  own  labor.  But  to 
recognize  this  right,  however,  does  not  explain  the  reason  why 
production  and  possession  are  separated,  or  what  line  of  action 
would  remedy  the  evil.  At  this  point  all  labor  discussion  must 
begin,  and  thus  far  all  theories  have  had  their  end.  I  believe 
that  labor  is  being  enslaved,  being  spoiled  of  its  reward  through 
the  laws  governing  land  and  currency.  "  Whoever  owns  the 
land  owns  the  people"  said  John  Locke  ;  and  "whoever  controls 
the  currency  of  the  nation  rules  the  people"  said  President 
Garfield.  All  production  is  from  the  earth,  and  all  business  is 
through  the  medium  of  currency ;  therefore  make  one  cheap 
and  the  other  plenty  in  order  to  bring  prosperity. 

Let  us  return  again  to  barbarism.  Then  nothing  but  labor 
value  was  considered.  How  much  warmth  will  it  secure  ?  or, 
how  many  of  the  life-giving  principles  will  it  yield  ?  were  the 
great  questions.     Soon  barter  and  exchange  of  commodities  be- 


244  PHILOSOPHY    OF    PKICE. 

gan  to  take  place  between  individuals  and  tribes.     The  iish  of 
one  section  were  exchanged  for  the  f nr  of  another  section.     It 
often  became  difficult  to  make  these  exchanges  exactly  balance. 
One  class  of  products  would  possess  more  labor  value  than  the 
other.  For  example,  ten  pieces  of  fur  w^ould  have  more  labor  value 
than  ten  fish,  but  not  enough  for  eleven.  This  made  the  bargain 
unequal  and  entailed  a  loss.     After  a  time  they  began  to  use 
shells  and  beads  to  represent  this  difference  in  labor  value. 
These  shells  and  beads  had  no  value  of  themselves,  but  by  com- 
mon consent  represented  labor  value.     By  and  by  some  one 
hoarded   up    enough   of    these   representatives  of    value    to 
exchange  entire  for  some  of  the  fish  or  fur.     Then  the  war 
between  capital  and  labor  began  and  has  continued  until  the 
present  time.     The  man  with  the  beads  and  shells  wanted  all 
the  fur  and  fish  he  could  obtain  for  them,  while  the  hunters 
and  fishermen  wanted  to  give  him  as  little  as  possible.     The 
self-same  struggle  is  with  us  to-day.     The  shells  and  beads  of 
barbarism  are  the  prototypes  of  the  gold  and  silver  of  civiliza- 
tion.    The  owners  of  these  shells  and  beads  of  barbarism  are 
identical  with  the  banker  and  bond  owner  of  civilization.    The 
form  and  material  have  changed.     The  conditions  and  circum- 
stances of  exchanges  have  differed  since  that  time.  But  the  old 
idea  of  barbarism,  tlie  relationship  which  these  representatives 
of  value  bear  to  each   other  and  to   all   created  wealth   has 
remained  the  same — has  obeyed,  all  these  years,  the  same  gen- 
eral laws,  and  has  been  guided  by  the  same  unvarying  rules. 
The  same  general  laws  govern  the  production  and  distribution 
of  wealth  to-day  that  did  when  production  and  distribution 
began.  AVith  an  increase  of  these  representatives  of  value  prod- 
ucts are  more  justly  distributed,  labor  is  paid  better,  and  pros- 
perity makes   its  appearance.     With  a  decrease,  exactly   the 
reverse  of  this  is  effected.     This  has  proven  true  in  all  ages  of 
the  world,  and  is  proving  true  at  the  present  time.    Our  land 
laws  are  the  worst  of  any  age  or  any  nation.     Other  countries 


APPENDIX.  245 

have  been  robbed  of  their  possessions  by  force  and  arms ;  but 
to  the  American  government  alone  belongs  the  disgrace,  of 
knowingly,  recklessly,  and  wantonly  confiscating  the  rightful 
heritage  of  future  generations,  and  passing  them  over  gratuit- 
ously to  heartless  corporations.  No  other  nation  vv^ould  permit 
so  vast  an  amount  of  its  public  domain  to  be  owned  and  con- 
trolled by  aliens.  With  our  present  population,  land  is  becom- 
ing scarce ;  what  will  be  the  situation  at  the  next  Centennial, 
with  four  or  five  times  the  number  of  people  ?  l^o  wonder  the 
doctrine  of  Henry  George  is  being  thoroughly  considered.  No 
wonder  the  idea  is  beo-inninoj  to  obtain  that  no  man  has  the 
riofht  to  own  one  acre  more  land  than  he  cultivates.  The  total 
area  of  the  United  States  is  given  at  1,814,000,000  acres.  Of 
this  amount  831  million  acres  have  been  disposed  of.  Sixty- . 
five  million  acres  of  this  large  amount  only  has  been  taken 
under  the  homestead  and  timber-culture  act.  Prior  to  1860  less 
than  28  million  acres  had  been  granted  to  railroads,  canals,  etc. 
Since  that  time  there  has  been  over  143  million  acres  given  to 
these  corporations,  making  a  total  of  171  million  acres  in  all. 
Hundreds  of  millions  of  acres  have  been  patented  to  individuals 
under  Spanish  and  other  foreign  claims.  In  one  instance 
12,714,765  acres  was  patented  under  one  of  these  Spanish 
claims.  In  1880  there  were  private  land  claims  of  this  character, 
amounting  to  567  millions  of  acres  on  file  in  the  land  office  at 
Washington.  It  has  been  discovered  that  more  than  ten  million 
acres  of  land  have  been  stolen  by  the  railroad  companies  by 
false  measurement  alone,  and  that  more  than  15  million  acres 
of  government  land  have  been  fenced  in  by  herders  and  used 
as  their  own.  Thirty-four  alien  land-owning  sjmdicates  own  29 
million  acres  of  American  soil.  Let  me  give  you  the  figures. 
The  number  of  acres  remaining:  unsold  is  983  millions.  Take 
from  this  the  area  of  Alaska,  370  million  acres,  and  we  have 
613  million  acres  on  hand.  In  this  amount  is  included  all  the 
waste  land  of  the  nation— the  swamps,  the  mountains,  deserts 


246  PEILOSOPHY    OF    PKICE, 

etc. — which  in  the  opinion  of  well  posted  men  v\"ill  reduce  this 
amount  by  400  million  acres  more.  This  leaves  but  213  mil- 
lion acres  for  future  generations  to  enjoy.  Who  can  contem- 
plate these  facts  without  alarm,  or  consider  the  statesmanship 
which  has  permitted  this  whole^le  appropriation,  without  dis- 
gust ?  Every  acre  of  land  taken  in  this  manner  makes  it  more 
difficult  to  obtain  free  homes,  which  of  itseK  increases  the  value 
of  the  land  already  bought,  and  consequently  lowers  the  price 
of  labor.  I  believe  no  alien  should  own  a  single  foot  of 
American  soil.  I  believe  every  railroad  grant  should  be  for- 
feited. All  these  vast  tracts  should  be  bought  back  by  the  gov- 
ernment, and  every  acre  given  to  actual  settlers  alone.  Ko  man 
has  the  right  in  justice  or  in  fact  to  more  land  than  he  can 
cultivate,  while  his  neighbor  has  none. 

Land,  labor  and  currency  are  the  three  controlling  factors 
of  every  government.  "With  proper  relations  between  each, 
prosperity  always  follows.  With  lack  of  harmony,  adversity  is 
sure  to  come.  Labor  is  dependent  upon  land  and  currency ; 
therefore,  whatever  affects  either  is  certain  to  be  felt  by  labor. 

A  stationary,  inadequate,  or  shrinking  volume  of  currency 
is  productive  of  greater  loss  to  labor  than  all  other  conditions. 
The  invention  of  money  has  corrupted  the  labor  value  of 
exchanges,  the  same  as  Satan  corrupted  the  morals  of  Heaven. 
It  took  Michael  and  the  hosts  of  Paradise  to  chain  that  mon- 
ster ;  what  will  it  require  to  bind  the  other  ?  Money  in  its 
primitive  and  beneficial  condition  was  the  instrument,  the  inci- 
dent, of  exchange,  but  not  the  object.  So  long  as  it  continued 
the  instrument,  the  aid  and  friend,  it  benefited  all  conditions  of 
men  in  a  proper  degree ;  but  when  it  became  the  object,  the 
aim  and  prize,  that  moment  it  ceased  to  do  good  and  began  to 
do  evil.  Then  differences  in  condition  began  to  appear,  master 
and  servant  began  to  be  seen,  rich  and  poor  broke  In  upon  our 
vision.  All  classes  of  men,  and  all  the  various  kinds  of  busi- 
ness, are  interested  in  this  question. 


APPENDIX.  247 

The  farmers  are  vitally  interested  in  this  question.  In 
1866,  the  ten  principal  crops — wlieat,  corn,  oats,  barley,  rye, 
buckwheat,  potatoes,  hay,  cotton  and  tobacco — sold  for  $2,007,- 
462,231,  In  1884,  after  a  lapse  of  18  years,  these  same  crops 
sold  for  12,043,500,481  ;  only  36  millions  more  after  18  years 
of  labor  and  improvement — a  gain  of  less  than  2  per  cent  in 
production  in  18  years.  The  number  of  acres  cultivated  was 
nearly  doubled,  the  number  of  farms  and  farm  hands  were 
doubled,  agricultural  machinery  was  greatly  improved,  and  yet 
the  products  of  1884  brought  the  farmer  less  than  2  per  cent 
more  than  the  production  of  1866. 

The  annual  income  of  the  fourteen  principal  States  of  the 
Union  is  about  five  thousand  seven  hundred  millions.  This  is 
the  estimated  value  of  agricultural  products  and  manufactured 
goods  together.  Of  this  total  estimate,  only  nine  hundred  and 
forty-one  millions  is  allowed  for  the  products  of  the  farmer  and 
grazier  and  fruit-grower !  That  means  that  the  most  absolutely 
necessary  of  all  the  industries  receives  for  its  annual  share  of 
the  common  increase  of  the  land  one-sixth  of  the  entire  home- 
made income  of  the  nation. 

In  1870,  the  number  engaged  in  agriculture  was  about 
seven  millions.  Those  engaged  in  manufactures  were  about 
two  millions.  Since  then  the  population  of  the  country  has 
increased  from  thirty-eight  to  fifty-two  millions.  The  increase 
has  been  larger  in  the  first  class  than  in  the  second.  The  pro- 
portion of  agriculturists  to  the  other  class  is  therefore  not  far 
from  eight  to  two.  Four  times  as  many  farmers  as  artisans, 
and  these  receive  only  one-sixth  of  the  national  income  from 
the  two  branches  of  industry.  If  four  times  six  are  twenty-four, 
then  the  farmer  has  one  twenty-fourth  of  the  annual  benefits  of 
industry  and  civilization,  and  the  factory  mechanic  or  artisan, 
or  somebody  else  has  the  rest ! 

Some  farmer  will  say  we  can  buy  more  with  a  dollar  than 
ever  before.     Can  you  pay  any  more  debts  ?    Can  you  pay 


248  PHILOSOPHY    OF    I'KICE. 

any  more  interest  ?  "What  will  it  purchase  more  of  ?  Nothing 
but  the  fruits  of  someone's  else  labor. 

One  common  error  M'hich  the  world  has  fallen  into,  and 
which  leads  to  many  other  mistakes,  is  that  money  buys  prod- 
ucts. Products  always  buys  money  instead  of  money  pur- 
chasing products.  The  application  of  low  wages  proves  this 
conclusively.  Low  wages  or  prices,  in  most  cases  are  the  result 
of  competition  among  laborers  or  producers  for  money.  The 
one  who  will  pay  the  most  for  it,  that  is  will  part  Avith  the 
greatest  amount  of  labor  or  its  products  for  the  smallest 
amount,  gets  the  money.  "With  money  for  any  length  of  time 
the  object  and  not  the  instrument  of  this  competition,  com- 
merce or  exchange  becomes  a  species  of  confiscation  as  it  now 
is.  It  means  the  products  of  one  set  of  laborers  competing 
with  the  products  of  another  set  of  laborers  ;  and  money  feast- 
ing and  enriching  itself  on  their  disasters. 

It  is  a  doubtful  advantage  for  the  farmer  to  buy  cotton 
cloth  for  five  cents  per  yard  that  is  really  worth  ten,  when 
in  consequence  of  the  low  prices  of  this  and  other  prod- 
ucts he  is  compelled  to  part  with  his  wheat  at  a  beggarly  price 
to  enable  the  producers  of  these  products  to  purchase 
it.  In  this  exchange  money  is  the  object  because  of  its 
scarcity,  and  not  the  incident  or  instrument  as  it  would 
be  if  it  were  sufficiently  abundant.  The  great  majority  of 
ideas  we  hear  regarding  money  comes  from  the  owners  of 
money.  This  of  itself  has  fastened  upon  the  people  a  line  of 
thought  in  some  instances  absolutely  fatal  to  their  own  best 
interests.  They  say  a  day's  work  will  l)uy  as  much  as  it  ever 
would.  That  may  be  true,  but  there  are  three  millions  of  our 
people,  at  the  present  time  unable  to  find  the  day's  work. 
They  tell  us  a  dollar  will  iDurchase  as  much  of  the  necessities 
of  life  as  ever  before,  yet  the  great  difficulty  lies  in  getting  the 
dollar.  The  true  way  to  examine  this  great  question  is,  how 
many  dollars  will  a  day's  work  purchase,  or  how  many  dollars- 


APPENDIX.  249 

will  the  products  of  labor  buy  ?  This  is  the  correct  test,  and 
when  labor  or  its  products  will  purchase  less  dollars  to-day 
than  a  year  ago,  the  proof  is  positive  that  money  is  dearer  and 
consequently  everything  else  cheaper.  Compare  interest  on 
money  now  and  a  few  years  ago  with  the  price  received  for 
products.  Jt  will  not  only  23rove  that  money  has  increased  in 
value  but  that  it  must  be  included  in  all  "  other  thinors"  that 
are  cheapened,  in  order  to  bring  about  anything  like  fair 
play.  Fifteen  years  ago  money  rented  at  ten  per  cent  and 
wheat  sold  for  two  dollars  per  bushel ;  fifty  bushels  paid  the 
interest  on  one  thousand  dollars.  Xow  money  loans  at  seven 
per  cent  and  wheat  sells  at  seventy  cents  per  bushel ;  instead 
of  taking  fifty  bushels  to  pay  the  interest  it  requires  one 
hundred.  If  the  use  of  money  had  lessened  in  value  with 
wheat,  interest  would  be  to-day  three  and  one-half  per  cent. 
Xothing  in  the  end  is  cheap  to  one  producer  that  is  made  so  at 
the  loss  of  another  producer. 

Let  us  examine  carefullv  the  wage  statement  of  the  last 
■40  years  from  the  census  reports.  I  will  take  up  the  manufac- 
tures, only  : 

In  1S50,  there  were  957,000  hands  employed.  They  pro- 
duced, less  raw  material  and  wear  of  machinery,  nett,  $437,- 
000.000.  Average  wages,  each,  $24S.  Multiplying  the  num- 
ber of  employes  by  the  average  wages  received  gives  us  the 
following  solution :  The  laborers  received  54  per  cent  of  this 
increased  value  as  wages ;  the  employers  received  46  per  cent 
of  the  same  for  profits.  Or,  each  laborer  received  $248,  and 
each  employer  received  from  the  same  laborer's  profit  on  his 
labor  $209. 

During  1860,  1,300,000  hands  produced  $805,000,000; 
wages,  $292  ;  labor  received  47  per  cent,  capital  53  per  cent ; 
each  laborer  received  $292  ;  gave  capital  $327.50. 

During  1870,  2,000,000  hands  produced  $1,310,000,- 
000  ;   wages,    $310 ;    labor     received     47   per     cent,     capital 


250  PHILOSOPHY    OF   PKICE. 

53  per  cent ;  each  laborer  received  $310 ;  gave  capital 
$345. 

During  1880,  2,739,000  hands  produced  $1,83-1,000,000 ; 
wages,  $346  ;  labor  received  51  2-3  per  cent,  capital  48  1-3  ; 
each  laborer  received  $346  ;  gave  capital  $323.50. 

Of  course,  this  vast  amount  of  profit  does  not,go  into  the 
pockets  of  manufacturers,  wholly.  A  portion  pays  rent,  taxes, 
interest — pays  for  lawyers,  directors,  etc.,  etc.  The  fact  I  desiro 
to  impress  is,  that  fully  one-half  of  the  wealth  produced  by 
the  laborer  goes  from  him  and  into  the  pockets  of  those  whose 
interest  it  is  to  take  with  each  year  more  and  more  of  labor' .i 
products,  with  no  return  whatever.  In  this  difference  between 
wages  paid  and  the  proceeds  of  labor  lies  hidden  the  germ  of 
all  profit,  interest  and  rent,  of  all  pauperism,  all  want,  and 
nearly  all  crime.     How  true  the  poet : 

"The  seed  ye  sow  another  reaps; 
The  wealth  ye  find  another  keeps." 

For  these  reasons  and  from  these  causes,  laborers  have 
been  compelled  to  band  together,  and  are  putting  into  practice 
in  all  parts  of  the  world,  in  one  form  or  another,  the  God-given 
right  of  self-protection.  For  years  capital  has  considered  itself 
thoroughly  entrenched  behind  the  law,  but  to-day  it  is 
looking  up  the  weak  points.  It  has  heard  the  sullen 
murmur. 

"  Do  you  dream,"  said  the  old  Sheik  Ilderim,  of  Medina, 
a  thousand  years  ago,  to  certain  Roman  ingrates,  "do  you 
dream,  because  the  Prophet  of  Allah  dwells  now  beyond  the 
bridge  of  Al  Sirat,  that  therefore  he  is  dumb,  and  deaf,  and 
blind?  I  tell  you,  by  the  splendor  of  God!  there  is  tempest 
brooding  on  his  brow,  there  is  lightning  gathering  in  his  soul 
for  you!" 

Men  often  ask  what  has  brouglit  about  the  present  labor 
movement  and  the  order  of  Knights  of  Labor?  It  began  with 
the  employer  losing  personal  feeling  toward  his  laborers,  by 


APPENDIX.  251 

looking  upon  them  as  so  many  beasts  of  burden  ;  regarding 
their  efforts  as  so  much  commodity  sold  in  the  market.     They 
were  hired  for  the  cheapest  price,  -vrorked  to  the  utmost  limit 
of  endurance,  and,  when  used  up,  tlu'own  aside  like  any  other 
old  and  worthless  machinery.     The  employers  grew   richer ; 
luxury  and  extravagance  increased  among  them.  The  thinking 
laborer,  noticing  this,  asked  himself :    "'Is  my  condition  im- 
proved ?"    He  could  but  know  it  had  not  improved.    His  daily 
bread  was  not  earned  with  less  toil,  nor  was  he  any  more  certain 
of  steady  work.     Being  brought  together  in  large  shops  with 
those  of  like  condition,  what  was  more  natural  than  to  talk 
over  these  matters,  to  discuss  their  wrongs  and  sufferings.    A 
class  feehng  soon  developed  under  these  circumstances,  which 
could  only  end  in  united  action.    Free  competition  imposed  no 
restraints  upon  the  powerful — they  were  at  libei-ty  to  exploit  the 
poor  to  their  heart's  content.  The  strength  on  the  one  side  was  so 
great  and  the  ability  to  resist  on  the  other  so  insignificant  that 
there  could  exist  no  freedom  of  contract.     As  Sismondi  said : 
^'The  rich  man  labored  to  increase  his  gains,  the  poor  man  to  sat- 
isfy the  cravings  of  his  stomach.  The  one  could  wait,  the  demands 
of  the  other  were  imperative."     As  the  knowledge  of  their 
wrongs  became  more  apparent,  the  yoke  of  oppression  began  to 
get  heavier.     At  last  tlie  idea  of  banding  together  for  mutual 
protection   against  a   common   foe  began  to  obtain  and   has 
resulted  in  these  trade  unions,  Knights  of  Labor  and — don't 
etart — Grangers.     Let  me  say  at  this  point :    United   Labor, 
to-day,  does  not  seek  charity,  does  not  ask  for  alms,  is  not  beg- 
ging bread.   Instead  of  this  it  stands  before  the  world  dem^jad- 
ing  justice,  asking  for  its  God-given  rights,  and  seeking  for 
those  privileges  that  were  bom  with  the  human  family — that  of 
earning  honorably  the  food  it  eats  and  the  clothes  it  wears. 
These  demands  must    be    granted,   these   wrongs    nnist    be 
righted,  or  the  whole  fabric  of  our  civilization  will  crumble  as 
has  others.     The  interests  of  the  farmer  and  the  Knights   of 


252  PHILOSOPHY    OF'  PRICE. 

Labor  are  identical.     Both  are  at  war  with  a  common  enemy — 
monopohes  or  corporations. 

Did  you  ever  think  what  a  corporation  is,  and  its  use  ?    It 
is  an  artificial  agency  of  man  destined  to  countervail   certain 
great  natural  and  salutary  laws.     It  is  a  natural  law  that  the 
man  who  acquires  capital  shall  administer  it ;  his  administration 
of  it  and  his  responsibility  for  such  administration  being  of  the 
essence    of    his  proprietorship,   such  use   of  it  should  cease 
with  his  death.     In  other  words,  the  natural  law  which  operates 
to   prevent   the   irresponsible   use  of  capital  and  the   undue 
accumulation  of  wealth  is  the  law  of  personal  responsibility 
for  what  a  man  has,  and  that  it  shall  be  distributed  at  his  death. 
Corporations  never  die  ;  they  keep  on  accumulating  capital  and 
power,  defying  the  law  of  death,  which  arrests  all  human  enter- 
prises.   The  enormous  advantages  of  corporations  over  individ- 
uals is  noticed  at  a  glance.    This  is  one  of  the  vested  rights  we 
read  so  much  about. 

When  you  hear  of  the  next  labor  strike,  don't  get  cross 
don't  say  that  these  Knights  are  disturbing  business,  but  send 
them  some  wheat,  or  pork  or  beef — something  that  will  sustain 
them  in  this  tight.     They  are  contending  for  living  wages,  that 
will  enable  them  to  pay  you  good  prices  for  your  products, 
that  in  the  end  you  can  pay  that  mortgage  or  that   note  or 
account  without  quite  so  much  hard  labor.     The  people  are  not 
blind  to  their  wants,  neither  are  they  oblivious  to  the  danger, 
that  threatens  not  only  them  but  our  whole  social  condition. 
They  know  a  permanent  laboring  class  is  being  formed  ;  they 
reaiize  the  full  import  of  that  situation,  because  they  know  the 
conditions  under  which  it  is  possible  to  exist.    A  permanent 
laboring  class  is  a  certain  number  of  our  people  doomed  to  per- 
petual servitude ;  without  hope,  with  nothing  better  in  pros- 
pect than  the  everyday  drudgery  of  the  slave.     Any   change 
for  them  would  be  better :  thev  could  be  no  worse ;  from  this 
fact  comes  the  great  danger.     John  Stuart  Mill  says :    "If  the 


APPENDIX.  253 

bulk  of  the  human  race  are  always  to  remain  as  at  present, 
slaves  to  toil  in  which  they  have  no  interest  and  therefore  feel 
no  interest,  drudging  from  eady  morning  till  late  at  night  for 
bare  necessaries,  and  with  all  the  intellectual  and  moral  defi- 
ciencies which  that  implies — without  resources  either  in  mind 
or  feeling — untaught,  for  they  cannot  be  better  taught  than 
fed  ;  selfish,  for  their  thoughts  are  all  required  for  themselves ; 
without  interest  or  sentiments  as  citizens  and  members  of  soci- 
ety, and  with  a  sense  of  injustice  rankling  in  their  minds, 
equally  for  what  they  have  not  and  what  others  have,  I  know 
not  what  there  is  which  should  make  a  person  of  any  capacity 
of  reason  concern  himself  about  the  destinies  of  the  human 
race."  What  a  fearful  picture,  and  yet  how  true !  It  shows 
us  vividly  the  condition  of  this  permanent  laboring  class 
which,  under  our  present  financial  laws,  is  rapidly  forming. 

O  luxury  !  thou  curst  by  Heaven's  decree 

How  ill  exchanged  are  things  like  these  for  thee  ! 

How  do  thy  potions,  with  insidious  joy, 

Diffuse  their  pleasure  only  to  destroy  ! 

Kingdoms  by  thee,  to  sickly  greatness  grown, 

Boast  of  a  florid  vigor  not  their  own. 

At  every  draught  more  large  and  large  they  grow, 

A  bloated  mass  of  rank  unwieldy  woe  ; 

Till  sapped  their  strength,  and  every  part  unsound, 

Down,  down  they  sink,  and  spread  a  ruin  round. 

"The  iron  law  of  wages,"  says  Ricardo,  "  is  the  natural 
price  of  labor  which  is  necessary  to  enable  the  laborers,  one 
with  another,  to  subsist  and  to  perpetuate  their  race  without 
increase  or  decrease." 

"  Labor,"  says  Karl  Marx,  "  is  bought  at  its  exchange  value 
and  sold  at  its  use  value."  Exchange  value  is  the  least  amount 
that  will  permit  the  laborer  and  his  family  to  live,  while  the 
use  value  is  all  the  employer  can  squeeze  out  of  it." 

"  You  believe,  perhaps,  fellow  laborers  and  citizens-,"  said 
Lassalle,  "that  you  are  human  beings,  that  you  are  men. 
Speaking  from  the  stand-point  of  political  economy,  you  make 
a  terrible  mistake.  You  are  nothing  but  a  commodity,  a  high 
price  for  which  increases  your  numbers,  just  the  same  as  a  hig^ 


35-i  PHILOSOPHY    OF    PKICE. 

price  for  stockings  increases  the  number  of  stockings,  if  there 
are  not  enough  of  them — and  you  are  swept  away.  Your 
number  is  diminished  by  smaller  wages,  by  what  Malthus 
calls  the  preventative  and  positive  checks  to  population.  Just 
as  if  you  were  vermin,  against  which  society  wages  war." 

"Ill  fares  the  land,  to  hastening  ills  a  prey, 
Where  wealth  accumulates,  and  men  decay; 
Princes  and  lords  may  flourish,  or  may  fade: 
A  breath  can  make  them,  as  a  breath  has  made; 
But  a  bold  peasantry,  their  country's  pride. 
When  once  destroyed,  can  never  be  supplied." 

— Goldsmith. 

This  condition  must  be  bettered ;  but  how  ?  Labor  laws 
have  proven  no  good,  as  they  are  easily  evaded.  Arbitration 
only  weakens  labor,  and  strengthens  its  oppressors.  Lectures 
upon  the  duties  and  relations  of  labor  and  capital  is  but  idle 
wind.  Some  factor  must  be  brought  to  bear  upon  this  ques- 
tion that  of  itself  will  bring  about  the  desired  change.  That 
factor,  in  my  judgment,  is  money.  Through  its  scarcity  all 
these  evils  overtake  us,  and  by  its  abundance  prosperity  and 
joy  return.  From  the  earliest  economic  history  to  the  present, 
the  plain  fact  that  an  increase  of  money  has  been  beneficial 
and  a  decrease  disastrous  to  the  business  and  prosperity  of  the 
human  race  has  been  fully  recognized.  In  fact,  the  degrees 
between  barbarism  and  civilization  are  clearly  defined  by  the 
volume  of  the  circulating  medium.  This  is  no  longer  a  party 
question,  it  is  national ;  its  tnitli  is  appreciated  by  men  in  all 
parties  and  in  all  conditions  of  life.  To  the  laborer,  for  all 
producers  are  laborers,  the  volume  of  currency  is  of  great  im- 
portance, as  it  fixes  the  price  both  of  labor  and  its  products. 
Increase  the  amount  of  currency  and  prices  advance ;  decrease 
the  amount  of  currency  and  prices  fall.     This  rule  is  infallible. 

"Whenever  prices  have  become  adjusted  to  a  given  amount 
of  currency,  an  increase  of  that  amount,  other  things  remain- 
ing unchanged,  will  cause  a  rise,  and  decrease  will  cause  a  fall, 
in  prices.  But  under  such  conditions  other  things  never  do 
remain  unchanged.     There  are  powerful  causes,  moral  a«d  ma- 


APPENDIX.  255 

terial,  wliich  invariably  operate,  when  money  is  increasing  in 
volume,  to  moderate  the  rise  in  prices,  and  to  intensify  their 
fall  when  it  is  decreasing.  Hence,  the  fall  in  prices  caused  by 
a  decreasing  volume  of  money  would  be  much  greater  in  de- 
gree than  would  be  the  rise  caused  by  a  proportionately  in- 
creasing volume. 

*^Whenever  it  becomes  apparent  that  prices  are  rising  and 
money  falling  in  value  in  consequence  of  an  increase  of  its 
volume,  the  greatest  activity  takes  place  in  exchanges  and  pro- 
ductive enterprises.  Everyone  becomes  anxious  to  share  in  the 
advantages  of  rising  markets.  The  inducement  to  hoard  money 
is  taken  away,  and  consequently  the  disposition  to  hoard  it 
ceases.  Its  circulation  becomes  exceedingly  active,  and  for  the 
very  plain  reason  that  there  could  be  no  motive  f©r  holding  or 
hoarding  money  when  it  is  falling  in  value,  while  there  would 
be  the  strongest  possible  motive  for  exchanging  it  for  proper- 
ty, or  the  labor  which  creates  property,  when  prices  are  rising. 
Under  these  circumstances  labor  comes  into  great  demand  and 
at  remunerative  wages.  This  results  in  not  only  increased 
production,  but  increased  consumption,  as  the  wants  and  ex- 
penditures of  laborers  increase  with  their  earnings." 

"At  the  Christian  era  the  metallic  money  of  the  Roman 
Empire  amounted  to  $1,800,000,000.  By  the  end  of  the  tif- 
teenth  century  it  had  shrunk  to  less  than  "8200,000,000.  Dur- 
ing this  period  a  most  extraordinary  and  baleful  change  took 
place  in  the  condition  of  the  world. 

Population  dwindled,  and  commerce,  arts,  wealth  and 
freedom,  all  disappeared.  The  people  were  reduced  by  jiov- 
erty  and  misery  to  the  most  degraded  conditions  of  serfdom 
and  slavery.  The  disintegration  of  society  was  almost  com- 
plete. The  conditions  of  life  were  so  hard  that  individual 
selfishness  was  the  only  thing  consistent  with  the  instinct  of 
self-preservation.  All  puljlic  spirit,  all  generous  emotions,  all 
the  noble  aspirations  of  man,  shriveled  and  disappeared  as  the 
volume  of  money  shrunk  and  prices  fell. 

History  records  no  such  disastrous  transition  as  that  from 
the  Roman  Empire  to  the  Dark  Ages.     Various  explanations 


256  PHILOSOPHY    OF    PRICE. 

have  been  given  of  this  entire  breaking  down  of  the  frame- 
work of  society,  but  it  was  certainly  coincident  with  a  shrink- 
age in  the  volume  of  money,  which  was  also  without  historical 
parallel.  The  crumbling  of  institutions  kept  even  step  and 
pace  with  the  shrinkage  in  the  stock  of  money  and  the  falling 
of  prices.  Ail  other  attendant  circumstances  than  these  last 
have  occurred  in  other  historical  periods  unaccompanied  and 
uufollowed  by  any  such  mighty  disasters.  It  is  a  suggestive 
coincidence  that  the  first  slimmer  of  liijht  only  came  with  the 
invention  of  bills  of  exchange  and  paper  substitutes,  through 
which  the  scanty  stock  of  the  precious  metals  was  increased  in 
efficiency.  But  not  less  tlian  the  energizing  influence  of 
Potosi  and  all  the  argosies  of  treasure  from  the  New  World 
were  needed  to  arouse  the  Old  World  from  its  comatose  sleep, 
to  quicken  the  torpid  limbs  of  industry,  and  to  plume  the 
leaden  wings  of  commerce.  It  needed  the  heroic  treatment  of 
rising  prices  to  enable  society  to  reunite  its  shattered  links,  to 
shake  off  the  shackles  of  feudalism,  to  relight  and  uplift  the 
almost  extinguished  torch  of  civilization.  That  the  disasters  of 
the  Dark  Ages  were  cause'd  by  decreasing  money  and  falling 
prices,  and  that  the  recovery  therefrom  and  the  comparative 
prosperity  which  followed  the  discovery  of  America  were  due 
to  an  increasing  supply  of  the  precious  metals  and  rising 
prices,  will  not  seem  surprising  or  unreasonable  when  the  noble 
functions  of  money  are  considered. 

Money  is  the  great  instrument  of  association,  the  very 
fibre  of  social  organism,  the  vitalizing  force  of  industry,  the 
protopla.sm  of  civilization,  and  as  essential  to  its  existence  as 
oxygen  is  to  animal  life.  Without  money  civilization  could  not 
have  had  a  beginninoj ;  with  a  diminishing  supply  it  must  lan- 
guish, and,  unless  relieved,  finally  perish." 

"  It  is  in  a  volume  of  money  keeping  even  pace  with  ad- 
vancing po])ulation  and  commerce,  and  in  the  resulting  steadi- 
ness of  prices,  that  the  wholesome  nutriment  of  a  healthy 
vitality  is  to  be  found.  The  highest  moral,  intellectual  and 
material  development  of  nations  is  promoted  by  the  use  of 
money  unchanging  in  its  value.  That  kind  of  money,  instead 
of  being  the  oppressor,  is  one  of  the  great  instrumentalities 
of  commerce  and  industry.  It  is  as  profitless  as  idle  machinery 
when  it  is  idle;  diSering  from  all  other  agencies,  it  cannot 
benefit  its  owner  except  when  he  parts  witTi  it.  It  is  only 
under  steady  prices  that  the  production  of  wealth  can  reach  its 
permanent  maximum,  and  that  its  equitable  distribution  is  pos- 
sible.    Steadiness  in  prices  insures  labor  to  all  and  exacts  labor 


APPENDIX.  257 

from  all.  It  gives  security  to  credit  and  stability  and  prosper- 
ity to  business.  It  encourages  large  enterprises,  requiring  time 
for  their  development,  and  crowns  with  success  well  matured 
and  carefully  executed  plans.  It  discourages  purely  speculative 
ventures,  and  especially  those  based  upon  disaster.  It  encour- 
ages actual  transactions  rather  than  gambling  on  future  prices. 
It  metes  out  justice  to  both  debtor  and  creditor,  and  secures 
credit  to  those  who  deserve  it.  It  prevents  capital  from  op- 
pressing labor  and  labor  from  oppressing  capital,  and  secures 
to  each  the  just  share  of  the  fruits  of  industry  and  enterprise. 
It  secures  a  reasonable  interest  for  its  use  to  the  lenders  of 
money,  and  a  just  share  in  the  profits  of  production  to  the  bor- 
rower. It  keeps  up  the  distinction  between  a  mortgage  and  a 
deed.  It  insures  a  moderate  competence  to  the  many  rather 
than  colossal  fortunes  to  the  few  at  the  expense  of  the  many." 

When  the  stock  of  money  is  shrinking  and  prices  are  fall- 
inoj,  this  conversion  can  only  be  made  at  rates  continually  grow- 
ing more  unfavorable,  while  at  the  same  time  the  products  of 
the  laborer  for  whose  wages  sacrifices  have  been  made  are  also 
undergoing  a  shrinking  of  money-value.  Thus  loss  and  sacri- 
fice are  encountered  at  every  turn,  and  the  owners  of  other 
capital  than  money  shrink  from  the  friction  of  exchange,  with- 
draw from  productive  enterprises,  and  only  exchange  as  much 
of  their  property  for  money  as  will  suffice  to  meet  the  neces- 
sary expenditures  of  living,  which  are  reduced  to  the  most 
economical  level,  as  it  is  principal  and  not  income  that  is  being 
consumed.  Little  more  labor  will  be  employed  under  these 
circumstances  than  is  sufficient  to  support  the  owners  of  capi- 
tal on  this  parsimonious  basis,  and  as  a  consequence  the  labor 
market  will  be  overstocked,  and  the  competition  between 
laborers  will  reduce  wages  to  a  starvation  level.  But  during 
this  period,  when  property  is  being  sacrificed  to  meet  current 
necessities,  and  laborers  are  being  remitted  to  idleness  and  des- 
titution, money  fattens  on  the  general  disaster. 

The  worst  effect,  however,  economically  considered,  of 
falling  prices,  is  not  upon  existing  property  nor  upon  debtors, 
evil  as  it  is,  but  upon  laborers  whom  it  deprives  of  employment 


258  PHILOSOPHY    OF    PKICE. 

and  consigns  to  poverty,  and  upon  society,  wliicli  it  deprives  of 
that  vast  snm  of  wealth  which  resides  potentially  in  the  vigor- 
ous arms  of  the  idle  workman.  A  shrinking  volume  of  money 
transfers  existing  property  unjustly,  and  causes  a  concentration 
and  diminution  of  wealth.  It  also  impairs  the  value  of  existing 
property  by  eliminating  from  it  tliat  important  element  of 
value  conferred  upon  it  by  the  skill,  energy  and  care  of  the 
debtors  from  whom  it  is  wrested.  But  it  does  not  destroy  any 
existing  property,  while  it  does  absolutely  annihilate  all  tlie 
values  producible  by  the  labor  which  it  condemns  to  idleness. 
The  estimate  is  not  an  extravagant  one  that  there  are  now  in 
the  United  States  four  million  persons  willing  to  work,  but 
who  are  idle  because  they  cannot  obtain  employment.  This 
vast  poverty-stricken  army  is  increasing,  and  will  continue  to 
increase,  as  long  as  falling  prices  shall  continue  to  separate 
money-capital,  the  fund  out  of  which  wages  are  paid,  from 
labor,  and  to  discourage  its  investment  in  other  forms  of 
property. 

Labor,  unlike  money,  cannot  be  hoarded.  The  day's  labor 
unperformed  is  so  much  capital  lost  forever  to  the  laborer,  and 
to  society.  It  being  his  only  capital,  his  only  means  of  exist- 
ence, the  laborer  cannot  wait  on  better  times  for  better  wages. 
Absolute  necessity  forces  him  to  dispose  of  it  on  any  terms 
which  the  owners  of  money  dictate. 

These  are  the  conditions  which  surround  the  laborer 
throughout  the  connnercial  world  to-day.  The  labor  of  the 
past  is  enslaving  the  labor  of  the  present.  At  least  that  por- 
tion of  the  labor  of  the  past  which  has  been  crystallized  into 
money  is  enabled  through  a  shrinkage  of  its  volume  and  while 
lying  idle  in  the  hands  of  its  owners  to  increase  its  command 
over  present  labor  and  over  all  forms  of  property  and  to  trans- 
form vast  numbers  of  honest  and  industrious  workmen  into 
tramps  and  beggars.  These  laborers  must  make  their  want® 
conform  to  their  diminished   earnings.     They  must   content 


APPENDIX.  255 

themselves  with  such  things  as  are  absolutely  essential  to  their 
existence.  Consumption  is  therefore  constantly  shrinking 
toward  such  limits  as  urgent  necessity  requires.  Production, 
which  must  be  confined  to  the  limits  indicated  by  consumption, 
is  constantly  tending  tovvard  its  minimum,  whereas  its  appli- 
ances, built  up  under  more  favorable  conditions,  are  sufficient 
to  supply  the  maximum  of  consumption.  Thus  idle  labor,  idle 
money,  idle  machinery,  and  idle  capital  stand  facing  each  other, 
and  the  stagnation  spreads  wider  and  wider.  The  future  affords 
no  hope  or  prospect  of  improvement,  except  through  a  change 
in  financial  policies. 

This  is  my  version  of  the  cause  and  remedy  for  the  pres- 
ent distressing  condition  of  labor.  It  may  not  please  you ;  it 
may  not  meet  with  your  approval ;  yet  it  is  honestly  given, 
with  the  hope  that  it  or  some  other  theory  may  be  applied  to 
wipe  out  this  misery  and  wretchedness. 

I  sincerely  believe  our  present  civilization  is  in  danger  by 
reason  of  this  labor  question ;  that  our  further  advancement 
depends  upon  its  proper  solution. 

"When  the  Great  Augustus  was  transforming  a  Home  of 
brick  to  a  Home  of  marble ;  when  its  wealth  seemed  rapidly 
increasing ;  when  its  victorious  legions  were  extending  its  bor- 
ders in  every  direction ;  when  in  its  manners  and  customs  it 
was  becoming  more  and  more  refined ;  when  Art  and  Litera- 
ture were  making  rapid  advances,  who  would  have  prophesied 
then  that  Rome  had  reached  its  zenith,  that  its  bright  sun 
would  go  down  in  black  midnight,  that  the  bat  and  the  owl 
would  soon  inhabit  the  palaces  of  the  Caesars  ?  Yet  that  was 
true ;  it  went  down  amid  the  gathering  gloom  of  the  Dark 
Ages,  never  to  reappear.  Greece  also  followed, 
"That  land  of  scholars  and  nurse  of  arms." 

Soon  we  find  Socrates  drinking  the  deadly  hemlock,  and 
Demosthenes  slaughtered  in  the  sanctuary  of  tlie  gods.  We 
learn  that  the  Huns  and  Yandals,  together  with   other   vast 


260  PHILOSOPHY     OF    PRICE. 

hordes  from  the  North,  swept  over  these  nations  with  the 
besom  of  destruction,  leaving  nothing  but  ruins  and  barbarism 
behind. 

We  read  of  the  great  law-giver,  Lycurgus ;  of  the  wisdom 
of  Solon  ;  the  heroism  of  Leonidas ;  the  patriotism  of  Cincin- 
natus,  and  the  statesmanship  of  Graecus ;  of  the  wars  of  Caesar, 
Trojan  and  Constantine.  We  are  made  acquainted  with  their 
great  acts  and  deeds,  but  look  in  vain  for  the  benefits  or  results. 
Why  were  their  ideas  of  government,  social  life,  and  the  best 
interests  of  mankind,  permitted  to  sink  into  the  unknown  of 
the  Dark  Ages,  from  the  Fourth  to  the  Fifteenth  centuries,  a 
period  of  more  than  one  thousand  years  ?  The  broad  empire 
of  Augustus  Caesar  was  made  bright  noonday  by  the  birth  of 
the  Son  of  God.  Why  did  that  star  at  Bethlehem  sink  below 
the  horizon  of  human  vision  only  to  reappear  at  the  reforma- 
tion after  a  period  of  more  than  fourteen  hundred  years? 
Why,  I  ask,  was  a  civilization  begun  so  auspiciously,  allowed 
to  sink  back  into  oblivion  ?  We  can  only  answer  by  saying  it 
was  true. 

Was  their  civilization  of  a  low  order?  Let  us  examine. 
What  position  in  poetry  does  the  Iliad  of  Homer,  or  the 
^neid  of  Yirgil  occupy  ?  Where  shall  we  place  the  Phillipies 
of  Demosthenes,  or  the  orations  of  Cicero,  the  philosophy  of 
Plato,  or  the  massive  intellect  of  Euclid  or  Aristotle  ? 

Would  Hannibal,  Ale»xander  or  Caesar  lose  by  comparison 
with  the  great  military  commanders  of  the  present  day  ?  No. 
The  world  never  saw  men  in  their  several  spheres  who  were 
their  superiors.  Tet,  notwithstanding  all  this,  the  present  gen- 
eration can  only  look  with  wonder  upon  the  ruins  of  their 
greatness,  and  speculate  as  to  the  means  in  which  this  whole- 
sale destruction  was  brought  about.  Our  present  civilization 
has  been  made  possible  by  fire  and  blood,  and  must  be  watched 
closely  and  protected  carefully. 

The  fire  which  burned  the  body  of  John  Huss  in  the  early 


APPEfJDIX.  261 

part  of  the  fifteentli  century  burns  even  now.  A  torch  was 
lighted  then  which  to-day  brightens  the  universe.  Belted 
knights  led  by  a  mitered  bishop  curbed  the  proud  spirit  of 
haughty  King  John,  and  wrested  from  him  the  tirst  great  bill 
of  human  rio;hts — the  Ma^rna  Charter. 

The  pride  of  Charles  I  was  broken  by  the  honest  piety 
and  unsheathed  sword  of  Oliver  Cromwell.  Our  own  nation 
was  carved  out  of  an  unbroken  wilderness.  Deeds  of  heroism, 
loyalty  of  purpose,  and  judgments  unbiased  by  prejudice,  have 
given  us  the  grandest  nation  on  the  face  of  the  earth.  But 
amid  all  this  greatness,  and  with  all  this  prosperity,  are  we  oc- 
cupying safe  grounds  ?  Has  not  our  civilization  reached  its 
zenith  ?  We  look  about  us  and  find  poverty  and  distress  in 
the  midst  of  plenty ;  hunger  and  nakedness  amid  bursting 
granaries  and  crowded  warehouses.  The  wail  of  the  starving 
is  wafted  into  the  banquet  halls  of  the  wealthy.  The  cry  of 
the  unemployed  comes  up  from  every  part  of  our  land,  and 
the  miseries  and  wretchedness  of  poverty  are  seen  at  every 
turn. 

Our  situation  is  almost  analogous  to  that  of  Rome  and 
Greece.  Will  it  end  as  did  they?  Who  can  tell?  Then, 
the  legions,  the  army,  whose  aid  and  friendship  enabled 
any  one  to  govern,  was  bought  and  sold  and  the  people, 
the  oppressed,  paid  the  tribute-money.  Kow,  our  public  offi- 
ces are  put  up  at  public  auction,  and  those  Mdio  have  the 
longest  purse  and  the  most  elastic  conscience  are  usually  the 
successful  bidders. 

It  is  claimed  that  we  could  not  go  back  to  barbarism,  as 
there  is  no  barbarism  to  conquer  as.  Go  into  the  by-ways  and 
hedges  of  civilization,  the  slums  of  our  cities  and  the  yards  of 
our  penitentiaries  and  jails.  What  do  you  find  there  ?  Worse 
foes  to  the  elevating  sentiments  of  civilization  than  ever  were 
the  Huns  and  Yandals  of  old.  The  Avhole  world  has  gone 
mad  for  gain.     Money  seems  to  be  the  only  incentive  for  activ- 


2C2  PHILOSOPHY  OF   PRICE. 

ity.  Everything  is  swallowed  up  in  that  one  blind  rage.  Pres- 
ent joys,  future  prospects,  kindly  hopes  and  even  the  future 
world  is  valued  in  dollars  and  cents.  "When  John  sent  his 
messenger  to  Christ,  he  directed  him  to  ask,  "Art  thou  he  that 
should  come,  or  do  we  look  for  another  ? "  Christ  said,  "  Go, 
show  John  those  things  which  ye  now  hear  and  see.  The 
blind  receive  their  sight,  and  the  lame  walk ;  the  lepers  are 
cleansed  and  the  deaf  hear ;  the  dead  are  raised  up."  "Was  that 
all  ?  No,  that  wliich  by  being  last  was  witnessed  as  the  climax 
of  all  his  deeds,  more  important  than  either :  "The  poor  have 
the  gospel  preached  unto  them."  Going  into  our  churches  of 
the  present  day,  knowing  the  poverty  and  distress  among  the 
people,  knowing  the  many  ragged  coats  and  threadbare  gar- 
ments which  necessity  compels  to  be  worn,  may  we  not  ask, 
upon  beholding  the  rich  clothing  and  costly  apparel  seen  on 
every  side :  Is  this  the  religion  of  Christ,  or  are  we  to  look 
for  another  ? 

This  state  of  thinors  can  not  endure. 

Something  must  be  done  to  break  dovm.  the  barrier  be- 
tween  rich  and  jjoor ;  between  those  who  have  and  those  who 
liave  not.  A  right  to  live  comfortably,  work  honorably,  and 
act  independently,  must  in  some  manner  and  through  some 
medium  be  granted  to  all.  For  six  thousand  years  Capital  in 
various  forms  has  oppressed  Lalx)r.  For  six  thousand  years- 
the  cries  of  the  victims  and  the  shouts  of  the  victors  have 
mingled  together.  For  six  thousand  years  the  wild  shrieks  of 
the  vanquished  and  the  hoarse  laugh  of  their  persecutors  have 
together  ascended  to  the  throne  of  God. 

Well  might  we  exclaim:  "How  long,  oh,  Lord,  how 
long ! "  During  all  these  years  this  black  midnight  has  envel- 
oped labor.  During  all  these  years  labor  has  struggled  man- 
fully to  dispel  this  gloom.  Some  have  pi*ayed  earnestly  to  see 
tlie  morning,  but  went  down  to  their  graves  in  the  gloaming. 
Others  have  worked  earnestly  and  well,  but  died  in  the  even 


AT'FENIIX  263 

ing.  Some  fouglit  on  and  lioped  on,  but  went  over  to  the 
wide  beyond  before  the  meridian  of  midnight.  Again,  others, 
believing  the  time  ahnost  at  hand,  phmged  into  the  thickest  of 
the  light,  only  to  perish  in  the  small  hours  of  the  waning 
night.  But  to  us,  here  in  the  last  quarter  of  the  nineteenth 
century,  are  given,  if  we  wisely  improve  our  time,  the  long- 
looked-for  privilege  of  beholding  the  gray  in  the  east  which 
betokens  the  sure  rising  of  the  orb  of  day.  And  unless  these 
signs  fail,  unless  we  are  recreant  to  our  most  solemn  duties, 
we  shall  see,  before  the  beginning  of  a  new  century,  the  sun, 
that  great  prototjnpe  of  creative  power,  riding  majestically  high 
in  the  blue  dome  of  heaven,  sending  down  to  earth  its  life- 
giving  rays,  upon  Labor,  protected  in  its  riglits,  free  in  its 
action,  and  permitted  to  mark  out  its  own  destiny. 


*Kr"E2*  265 


INDEX. 


Ability  to  Purchase — Establishes  tfee  price,  page  15  ;  what 
ability  to  purchase  is,  how  obtained,  etc.,  18 ;  depends 
upon  price,  26 ;  governs  what  we  shall  eat,  214 ;  Eng- 
land's ability  to  purchase,  214  ;  what  an  ability  to  pur- 
chase Avould  do,  215,  216. 

American  Review — Quotation,  62  ;  on  prices,  93. 

Alhson  Sir  Archibald — Sufficient  and  contracted  currency,  72  ; 
in  his  history  of  Europe,  two  great  events,  75,  76  ;  offsets 
of  less  currency,  153. 

American  Currency — Wanted,  why?  167,  168. 

Aristotle — Value  in  monev,  196. 

Barter — Between  tribes,  13 ;  in  exchange,  27  ;  barter,  how 
destroyed,  31. 

Bonds — IS^ational,  bought  with  paper  and  paid  in  gold,  why 
should  they  be  worth  20  per  cent  premium  when  fai-ms 
cannot  be  mortgaged,  etc.,  95. 

Bonds — Sold,  107  ;  5-2r>  bonds  sold  abroad,  109  ;  bonds  selling 
at  premium,  110;  discussion  as  to  how  the  bonds  should 
be  paid  etc.,  110 ;  the  gold  cost  of  bonds  and  greenback 
cost  compared,  prolit  to  bankers,  110;  bonds  payable  in 
paper  or  coin,  111  ;  Sherman's  letter  and  speeches,  111, 


2G0  PHILOSOPHY     OF     PEICE. 

112;  bonds,  how  bought,  113;  bonds,  premium,  115 ; 
bonds  of  ISTO,  how  taken  etc.,  121 ;  reasons  that  should 
govern  such  contracts,  122  ;  efiects  of  changing  the  stand- 
ard of  payment,  123  ;  no  silver  ever  paid  on  a  bond,  124; 
law  of  1862  providing  for  payment  of  a  per  cent  of  bonds, 
124;  act  under  which  l)onds  wei'e  issued,  124,  125;  read- 
ing of  the  bond,  125,  126  ;  amount  of  bonds  bought  between 
1875  and  1878,  comments,  126;  bonds  can  be  paid  in  sil- 
ver, 127 ;  bonds  due  and  payable  at  any  time,  127,  128 ; 
effect  of  paying  in  silver,  129. 

Bodin — In  1557,  quotation,  32. 

Bowen  Francis — Increase  of  currency,  57  and  58. 

Bryant — In  his  work  on  money,  result  of  price,  76 ;  on  money, 
172,  173,  174. 

Boston  Advertiser — Increase  and  decrease  of  currenc}',  its 
effects,  77. 

Byles  Judge  John — The  effects  of  increasing  and  contracting 
the  currency  of  England,  77,  78,  79,  80. 

Bullion  Report — To  parliament  1810,  on  the  high  price  of  bul- 
lion, 80,  81. 

Bank  of  England — Its  examination  in  1847,  testimony  of  its 
officers,  86,  87,  88. 

Blake — Report  on  precious  metals,  92. 

Bayard  Senator — Kind  of  money  to  pay  for  bonds,  113. 

Beck  Senator — Speech  on  the  silver  question,  130, 131, 132, 133. 

Burke — On  changing  contract,  147. 

Bancroft — Effects  of  shrinking  currency,  147. 

Belknap — Effects  of  shrinking  money,  148,  149. 

British  Ambassador  to  France — Effect  of  less  monev,  152. 

Commerce — Unrestricted  17;  cm-'cy  contraction  discussed,  50. 

Currency — Its  increase  and  decrease  and  their  effects,  from  dif- 
ferent authorities,  51  to  94 ;  currency  contraction,  65  ;  its 
effects,  94,  95,  96  ;  effects  upon  real  estate  transactions,  96  ; 
worse  and  worse,  97 ;  contraction,  story  of,  107 ;  currency, 
amount  of  in  1866,  what  it  consisted  of,  108 ;  its  contrac- 
tion laws,  108  ;  currency  contraction  continued,  109 ;  cur- 
rency burned  up,  109 ;  amount  of  currency  reduction  up 
to  1868,  110;  seven-thirty  bonds  as  currency,  140;  cur- 
rency contraction,  140 ;  amount  and  effect  of  contraction, 
143 ;  lessening  of  volume,  164 ;  the  natural  result,  165 ; 
currency  volume  governs  prices,  166  ;  distinctive  currency 
for  each  nation,  170  ;  reasons,  170,  171 ;  expensive  cur- 
rency, 175,  176  ;  kind  and  amount  of  currency,  177 ;  cur- 
rency for  sparsely  settled  countries,  194. 


INDEX.  267 

■ 

Crawford  William  H. — Quotation,  51. 

Chevelier  Professor — Increase  of  currency,  60. 

Carey  Henry  C. — Increase  of  currency,  66.  67,  68,  72. 

Clay  Henrv — Eloquent  speech  on  currency  durinn;  the  debates 
of  1840,  pages,  6S.  69  70,  71,  94,  151.  "^ 

Copernicus — His  address  to  the  King  of  Poland,  7-4. 

Cliase  Solon — "  Tliem  Steers,"  95. 

Carey  Mathew — Effect  of  less  money,  149.  • 

Caireus  Prof.  J.  E. — Greenl^acks  and  foreign  trade,  181. 

Credit — How    maintained,  114 ;  how  improved,  115. 

Campaign— Of  1876,  118. 

Contract — Between  bondholders  and  people,  howmanaged,  145; 
with  bondholders  changed,  116. 

Confidence  and  good  times,  164. 

Coin  Basis — Shown  up,  176  ;  kind  of  currency  not  decided  yet 
in  Europe,  182;  change  of  currency,  its  effect,  183; 
metal  as  a  basis  for  currency,  objections,  183, 184, 185  ;  cur- 
rency and  I^apoleon,  185,  186. 

Currency — Supply,  where  from,  186,  187,188;  currency,  how 
inflated  and  contracted,  ISS ;  power  of  l>anks  over  cur- 
rency, 188,  189 ;  what  currency  is  required  to  perform, 
with  tables,  189,  190,  191 ;  credit  currency,  bank  checks 
etc.,  its  cause,  191,  192  ;  currency  and  its  relation  to  pro- 
tection, 213,  214  ;  currency  and  its  effects  on  business,  the 
cause  and  remedy  discussed,  218,  219  ;  currency  makes  the 
extreme  between  poverty  and  prosperity,  226 ;  currency 
the  great  panacea,  232. 

Capital  and  Labor — the  war  between,  217,  220. 

Doublino:  of  Debts — Discussed..  50. 

Debt— Public  statement  for  1866, 138  ;  its  condition,  143,  144; 
it  has  not  been  lessened  in  labor  value,  144. 

Doubleday's  Financial  Historv  of  England — Effects  of  contrac- 
tion, "73,  74,  156. 

Davis  Garrett — Kind  of  money  to  pay  bonds,  113. 

England's  Prosperity — During  war  with  Kapoleon.  50. 
Economists — Being  a  creditor  nation,  etc.,  129. 
Ewing  Thomas — On  Resumption,  156. 
Exchanges — Leveled  uj)  with  commiodities,  174. 
Experts — Governed  by  ability  to  purchase,  215,  216. 

Financial  Reports  to  Congress,  32. 
Fanchett  Leon — Quotations,  53,  64. 
FundingBill  of  1870,  116. 


268  PHILOSOPHY    OF    PRICE. 

Gallatin  Albert — From  his  work  on  money,  varieties  of  price, 
76  ;  value  of  money,  201. 

Goschen  Hon.  Geo.  I. — Address  to  Banker's  Institute,  London, 
1883;  eifects  on  price  of  the  currency  of  a  nation,  81,  82, 
83,  84. 

Garfield — ''The  people  would  remember  the  bankers  of  Wall 
street"  etc.,  109. 

Grant  Pr^ident — Letter  on  silver,  119. 

Green biicks — Rescued  frcwn  destruction,  120, 

Gibbs  11.  II. — England  a  creditor  nation,  129. 

GoveiTiinent  Honor  etc.,  129. 

Government  Debts — How  to  pa_y,  etc.,  129. 

Gordon  Senator — Contraction,  its  eifects,  153,  154,  155. 

Gold — Its  scarcity  etc.,  160;  demonetized,  169,170;  bought 
by  all  nations,  the  result,  178;  the  struggle  for  gold  and 
the  effects.  193 ;  gold  or  silver  not  fair  standards  of  pay- 
ment, 194. 

Hume  David — Quotation,  51. 

Hunter  R.  M.  T.— Quotation,  51. 

Horton  Mr. — Increa,se  of  currency,  62. 

Hum])oldt — Relating  to  amount  of  gold  and  silver  and  its  ef- 
fects, 76,  77  ;  value  of  money,  201. 

Hamilton  Alexander — Use  of  money,  evils  of  contracting  it,  84. 

Hnghes  Judge  Robert,  of  Virginia — Effects  on  price  of  increas- 
ing or  decreasing  amount  of  money,  84,  85. 

Interest — Discussed,  38 ;  lowering  rates  of  interest  indicates 

fin.'incial  prostration,  42. 
Industry — The  true  cause  of  its  stagnation,  98. 

Jerons  W.  J. — Increase  of  currency,  55,  56  ;  value  of  money, 

201  ;  value  in  currency,  202. 
Jacob  Mr. — Increase  of  currency,  61. 
Jacob, William — His  examination  into  the  quantity  of  money 

at  various  periods,  tables,  74,  75. 
Jefferson — On  currency  basis,  177,  178. 

Kellogg  Mr. — Sacredness  of  money,  219. 

Labor — Sole  producer  of  wealth,  18;  labor  em.ploys  capital  but 
not  money,  23  ;  labor  jiroducts  ruling  factor  in  exchange, 
24  ;  quotation,  26  ;  effect  of  a  shrinking  volume  of  money 
discussed  at  length,  43,  44 ;  conflict  between  labor  and 
capital,  44  ;  reasons,  45 ;  labor  cannot  be  hoarded,  con- 
ditions which  surround  labor  discussed,  48  ;  number  of  idle 


INDEX.  269 

laborers  and  tlie  effect,  49  ;  a  blow  at  labor,  etc.,  50  ;  labor 
and  its  products  lose  value,  95  ;  where  found,  95  ;  labor 
thrown  out  of  employment  bj  falling  prices. 

Laboring  Classes — Tlieir  condition,  106  ;  labor  and  capital  con- 
flict, etc.,  146  ;  laws  favoring  capital  as  against  labor,  146  ; 
three  million  unemployed  laborers,  the  result,  163  ;  labor 
and  protection,  211  ;  pauper  labor  act,  212, 213 ;  labor  laws 
oppressive,  218  ;  labors  reward,  219  ;  advantages  of  well 
paid  labor,  222,  223,  224 ;  Knights  of  Labor,  their  de- 
mands, comments,  232. 

Laveleye  Professor — Quotation,  53 ;  value  of  mono}',  201. 

Linderman — Increase  of  currency,  64. 

Laws — Should  protect  the  weak  as  against  the  strong,  103. 

Law  John — Yalue  in  currency,  202. 

Locke  John — Value  of  money,  93. 

London  Economists — Evils  of  shrinking  money,  100  ;  amount 
of  gold,  194. 

London  Times— Less  money  in  France,  152,  153. 

Levi  Prof. — "Why  gold  was  dem.onetized,  169. 

Mill  John  Stuart — Overproduction,  15  ;  increase  of  currency, 
54,  55  ;  value  in  currency,  202. 

McCulloch  J.  E. — Quotation,  52  ;  effect  of  a  change  of  con- 
tract, 116, 157;  value  of  money,  201. 

Mason  and  Labor — Increase  in  currency,  63. 

Morton  O.  P. — How  bonds  should  be  paid. 

Marshall  Chief  Justice — Effects  of  less  currency,  149,  150. 

Minot — Cause  of  public  disorder,  151. 

Monetary  Systems — The  curse  of,  227. 

Money — Does  not  purchase  products,  example,  22  ;  money 
levels  up  bargains,  23  ;  money  not  used  up  in  speculation, 
24;  money  is  inert  matter,  men  gather,  it  etc.,  25  ;  under 
a  firm  system,  28  ;  quantity  limited  without  cost  of  pro- 
duction" considered,  28;  "how  limited,  29;  medium  of 
exchange,  measure  of  value  for  exchange,  30  ;  creation  of 
laws,  substitutes  for  money,  if  money  had  purchasing 
power,  31 ;  money  of  to-day,  no  matter  what  is  used,  the 
amoun-t  governs  everything  else,  32  ;  money  of  the  Iloman 
empire  at  the  Christian  era  and  at  end  of  the  Dark  Ages, 
33  ;  ruinous  effects  of  decreasing  money,  disasters  of  the 
Dark  Ages,  symptoms  of  like  character  in  1809,  money 
the  instrument  of  association,  etc.,  34  ;  money  increased  in 
value  145  per  cent  between  1809  and  1848,  35  ;  shrinking 
money  volume  enforces  idleness,  volume  of  money  keep- 


270  PHILOSOPHY    OF    PRICE. 

ing  pace  with  population  and  business,  etc.,  36  ;  how  it 
shonld  increase  or  decrease,  37 ;  quantity  can  not  be  ean-' 
trolled  arbitrarily  etc.,  decreasing  volume  of  money 
increases  the  value  of  each  unit,  38,  39  ;  increased  value  of 
money  discussed,  42 ;  quantity  of  money  discussed,  45,  46, 
47 ;  hoarded  money,  its  effects,  47 ;  money  functions,  171, 
172  ;  money-capital,  the  wage  fund,  etc.,  99 ;  metalhc 
money  an  unfair  measure  of  value,  172 ;  paper  money  as  a 
measure  of  value,  172 ;  money,  from  Bryant,  172  ;  paper 
money  and  its  relation  to  foreign  trade,  179,  180,  181 : 
money  measurement  compared  to  the  yard-stick,  190'; 
money'ideas  of  gold  and  silver  the  same  as  in  the  time  of 
Abraham,  19S,"l99;  money  value  considered  199 ;  how 
increased,  199,  200 ;  Intrinsic  value  in  money,  200. 

Is^ational   Degradation  or  Civilization,  21  ;    national  debt  in 

1S66  etc.,  107 ;  national  bonds  sold,  107; 
New  York  Tribune — Statement  of  comparative  prices  of  200 

articles  with  table,  157,  158,  159. 
Xorth  British  Review — Yalue  in  money,  208. 

Ovcrpi-oduction — Means  a  surplus  of  success,  overproduction  of 
wheat  brings  hunger,  14  ;  ignorance  regarding  overproduc- 
tion 35  ;  overproduction  explained  fully,  161. 

Otto,  French  Master — Effect  of  less  money,  149. 

Price — Theory  of,  10 ;  how  determined,  11  ;  what  it  is,  cause 
for  differences  in  price,  12 ;  price  of  labor  governs,  etc., 
21  ;  dictator  of  civilization,  the  value  put  upon  labor,  etc., 
25 ;  is  the  expression  in  money  terms,  market  price,  27 ; 
dependence  upon  currency,  volume  of  currency  indicates 
purcliasable  amount,  30;  rise  and  fall  of  prices,  reasons  for, 
with  increasing  prices  come  more  labor  and  better  times, 
etc.,  33 ;  prices  fell  60  per  cent  between  1809  and  184S, 
discontent  in  England  and  on  the  continent  in  conse- 
quence of  falling  prices,  they  compel  capital  to  avoid  en- 
terprises, 35 ;  steady  prices  insures  labor  to  all,  etc.,  36 ; 
gives  justice  to  debtor  and  creditor,  keeps  up  the  dis- 
tinction between  a  deed  and  a  mortgage,  37;  price  de- 
creases witli  the  volume  of  currency,  39;  effects  of  falling 
prices  in  the  United  States,  on  mining  and  railroads,  40  ; 
on  farms  and  securities,  41 ;  prices  have  fallen  since 
1873,  64',  change  in  amount  or  value  of  money  changes 
the  price,  73 ;  every  general  fall  in  price  the  result  of  a 
decreasing  currency,  97;  falling  prices  a  reason  for  not  in- 


I  X  D  E  X.  271 

vesting  in  business,  99 ;  falling  prices  compel  capital  to 
withdraw  from  production,  99  ;  explanation  of  how  an  in- 
crease and  decrease  of  money  increases  or  diminislies  the 
price,  86,  101,  102;  rock  bottom  prices  the  result,  1G8. 

Pierpont  Edwards — Payment  of  bonds,  127 

Political  Economists — 13. 

Perry  Professor — Increase  of  currency,  60, 

Price  Prof,  wcomy — Power  of  money,  77 ;  vaiue  of  money, 
201. 

Peel  Sir  Kobert — Contracts  and  currency,  93. 

Public  Credit  Strengthening  Act— 110  ;'  effect  of  128. 

Panic  of  18-17  in  England — S6. 

Patterson  Prof. — Value  in  Currency,  204,  205. 

Protection — to  home  industry  defined,  209, 210,j211;  protection, 
and  the  conditions  following,  211,  212 ;  protection  and 
its  relation  to  emigration  and  currency  supply,  211,  212 ; 
protection  and  pauper  labor,  212,  213 ;  protection  and 
contraction,  213,  214  ;  elfects  of  low  prices  on  the  moral 
and  material  interests,  225. 

Quotations — 

Allison  Historian— 66,  72,  75,  76,  85,  86, 153. 

American  Review — 52,  92,  93. 

Aristotle— 196. 

Bancroft  Historian— 147,  148. 

Bayard  Senator — 1 13. 

Beck  Senator- 130,  131,  132,  133. 

Belknap  Historian — 148,  149. 

Blake  Mr.— 92. 

Bodin— 32. 

Bowen  Francis — 57,  58. 

Bryant— 76,  172,  173, 174. 

Bullion  Report  to  Parliament— 203,  204. 

Burke— 147 

Carey  Henry  iJ.—rJO,  67,  72,  94. 

Carey  Matthew— 149. 

Cazalet  Edward — 84. 

Chase  Solon— 95. 

Chevelier  Prof.— 60,  104. 

Clav  Henry— 68,  69,  70,  71,  151. 

Congress  Acts  of— 110,  124,  125,  126,  127,  128,  140.  212. 

213. 
Copernicus — 74. 
Crawford  Wm.  H.— 51. 


272  rHiLosoPBY   of   pbiec 

Davi?  Garrett — 113. 

Doubleday  Historian — 73,  74,  156, 

Ewing  Thomas — 156. 

Fancliet  Leon — 53. 

Fawcett— 64,  65. 

Gallatin  Albert— 76,  201. 

Gibbs  H.  H.— 129. 

Gordon  General  and  Senator — 154,  155,  iHB 

Goschen  Hon.  Geo.— 81,  82,  83,  84. 

Grant  President— 113. 

Hamilton  Alexander — 84, 

Hooton  Mr. — 62.  i, 

Hume  David — 51.  59. 

Humboldt— 76.  201. 

Hunter  R.  M.  T.— 51. 

Jacob  Mr.— 61,  74,  75. 

JefPerson  Thomas— 177,  178. 

Jerons  W.  J.— 55,  56,  57,  201,  202. 

Kellogg  Mr.— 219. 

Law  Jolm— 202. 

Laveleye  Prof.— 53,  201.  '      - 

Levi  Prof.— 169. 

Linderraan  Dr. — 64. 

Locke  John — 93. 

London  Economist — 100,  194. 

London  Times — 152. 

Marshall  Chief  Justice— 149,  150.  • 

Mason  &  Lailor — 63. 

McCnlloch— 52.  116.  156,  157,  201. 

Mill  Jolin  Stuart— 15,  54,  55,  59,  202.  ,^  .         i 

Minot  Historian — 150,  151.  //■' 

Morris  James — 87.  '".  ' 

Morton  O.  P.— 114.  ; 

New  York  Trilmne— 121,  158,  159,  1^1  ^  [ 

North  British  Review— 208.  '  •  j 

Ottt),  French  Minister-149.  .  ) 

Palmer  John  M.— 87.  : 

Patterson  Mr.— 204,  205.  \ 

Peel  Sir  Robert— 63.  j 

Perry  A.  L.— 60,  63.  \ 

Plerpoiit  Edv/ards — 127.  i 

Prescott  Henry  J.— 87.  88.  ' 

Pj'ice  Bonom'v — 77.  201.  - 


INDEX.  273  i 

Kicardo— 55,  58,  201.  ] 

Rothschild  Baron — 53.  i 

Sealy  Mr.— 88.  89.  '  I 

Seyd  Earnest— 52,  91,  92.  ■ 

Shellabarger  Mr.— 219.  ' 

Silver  Commission— 33,  34:,  35,  IIY,   118.  179,  180,  181,  ] 

182.  '  i 

Sherman  J.-^.n— 111,  112.  ) 

Smith  Ada.ii— 54,  SUo.  j 

Soetbeer  Dr.— 77.  j 

Stevens  Thaddeus — 114. 
Sullivan  Sir  E. — 65. 
Sumner  W.  G.— 68. 

Supreme  Court  Decision— 134,  135,  136,  137» 
Syme  Prof. — 64. 
Thompson  Prof.— 58,  203. 
Tooke  Thomas— 59. 
"Wade  Hon.  B.  F.— 112,  113 
Walker  T.  A.— 61,  62,  63. 
Wavland  Francis — 57. 
Weiler  Hon.  L.  H.— 221,  222 
Wolowski  M.— 53. 

Rothschild  Baron — Quotation,  53. 

Ricardo — Increase  of  currency,  55  ;  value  of  money,  201. 
Resumption    Act   Bill,  etc. — 117;    result  of   specie  resump- 
tion, 120. 
Resolutions — 1878,  declaring  the  bonds  payable  in  silver,  127. 
Railroads  in  excess — 162:  money  sunk  in  railroads,  162. 

Smith  Adam — Double  value,  use  and  exchange,  10  ;  increase  of 

currency,  54 ;  value  of  currency,  202. 
Seyd  Ernest— Quotation,  52 ;  on  price,  92. 
Syme  Prof. — Increase  of  currency,  64. 
Sullivan  Sir  Edward — Increase  of  currency,  65. 
Sumner  W.  G. — Increase  of  currency,  'oS. 
Soetbeer  Dr. — Value  of  money,  77. 

Sealy  M.,  of  England — Bank  of  England,  power,  etc.,  88,  S9. 
Supply  and  demand — Theory  of,  13;  dangerous  doctrine,  14; 

does  not  establish  price,  15  ;  example,  16. 
Securities — How  affected  by  falling  prices ;  personal  property 

securities  not  available  ;  what  is,  41. 
Silver  coinage  and  its  effect — 227,  228. 
Standard  of  value  and  payment  explained — 229.  230.  ' 


274  PHILOSOPHY    OF     PRICE. 

Silver  Commission  Report — Quotation  33  ;  effect  of  resumption, 

117,  118. 
Sherman — On  the  kind  of   money  with  which   to  pay  5-2G 

bonds,  111,  112  ;  agent,  169. 
Stevens  Thaddeus — How  the  bonds  should  be  paid. 
Silver  dollar  dropped  and  silver  demonetized — 116. 
Silver  remonetized — 120  ;  silver  certiilcates,  121. 
New  York  Tribune  on  the  same — 127. 
Su2:>reme  Court  legal  tender  decision — 13-4,  135,  136,  137. 
Speculation  and  price — 163. 
Standard  of  payment — 166. 
Shellabarger  on  money  loans — 219. 

Thompson  Professor — Increase  of  currency,  58,  59;  value  in 

currency,  203, 
Theories  for  currency  evils — 98. 
Tal)le— Amount  of  currency,  1866  and  1886,  139. 
Table — Average  circulation  per  capita,  from  1866  to  1886, 139= 
Table— Showing  failures  from  1866  to  1886,  141. 
Talkie — 'Proving  the  debt  larger  than  when  ilrst  made,  144. 
Tables — Of  Gen.  Gordon,  relating  to  contraction,  154,  155. 
Table — Showing  good  and  bad  times,  and  amount  of  currencv, 

157. 
Table — Of  New  York  Tribune,  showing  comparison  of  prices 

for  more  than  200  articles ;  rise  of  gold  proven,  159. 
Taxation — A  basis  for  currency,  177. 
Trade  relations  with  other  nations — 179. 

Value — An  element  in  exchange  ;  exchange  not  an  element  of 
value,  10 ;  value  basis  of  industrial  activity;  two  ele- 
ments to  value,  utility  and  scarcity;  value  in  use  and  in 
exchange;  intrinsic  value;  commercial  value,  11;  com- 
mercial value  liuctuates,  intrinsic  never,  12;  commercial 
value  fixed,  16  ;  high  commercial  value  a  gauge  of  civiliza- 
tion, 17  ;  value  of  each  unit,  26,  28  ;  of  money  how  meas^- 
ured,  29 ;  value  of  paper  money,  165 ;  values  of  metal 
money  how  it  changes,  200,  201 ;  value  of  gold  and  silver 
changing,  tal)le,  205,  206;  values  changed  with  each  other, 
206 ;  value  established  of  quantity,  2U6,  207 ;  value,  how 
measured,  206,  207 ;  what  the  measure  must  be,  208 ; 
shrinkage  of  values  discussed,  228 ;  standard  of  value  ex- 
plained, 228,  229,  230 ;  standard  of  payment  explained, 
229,  230 ;  what  value  is,  229,  230 ;  labor  value  discussed, 
233,  234,  235. 


INDEX.  275 

Von   Barr — Evils    of  demonetizing  silver  in   Germany,  86. 
Yanderbilt  and  the  paupers — l(i3. 

"Wealth — Visible  and  invisible,  19 ;  how  wealth  is  produced, 
19,  20 ;  wealth,  its  just  distribution  discussed,  230 ;  wealth, 
there  should  be  a  limit,  230,  231 ;  wealth  in  large  amounts 
not  benehcial,  231. 

"Wages — Are  reduced  how,  24. 

"Wolowski  M. — Quotation,  53. 

"Way land  Francis — increase  of  currency,  57. 

"Walker  Francis  A. — increasing  currency,  61,  62. 

"Williamson  Stephen — from  his  work  "  bad  trade  and  its  caus- 
es," effects  of  currency  on  price,  89,  90.  91. 

"Wade  Hon.  B.  F. — kind  of  money  to  pay  5-20  bonds. 

"Weller  Hen.  L.  H. — formula  for  better  times,  220. 


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